The gold market continues to defy gravity as it approaches December all-time highs. While the market appears a bit overstretched, some analysts say the momentum movement is just beginning. They also note that the market still has room to move higher.
Options traders are heavily positioning up!
cryptokoin.comAs you follow from , gold prices have risen to all-time highs. Although the market has fallen from its highs, it is still making solid gains. Gold contracts for April delivery were last traded at $2,137.60 per ounce. Despite this retreat, gold prices increased significantly. CME analysts note that the recent volatility in gold and silver supports higher prices in the near term. Analysts make the following assessment:
Looking at our volatility index (CVOL), options traders are positioning more heavily for upside risk, with the silver call skew rate reaching a 7-month high and the gold call skew rate reaching a 3-month high.
The momentum in the gold market is very different compared to previous months!
David Morrison, Senior Market Analyst at Trade Nation, says the question many investors are asking now is whether gold’s price action will be similar to its all-time high in December. The precious metal rose as high as $2,152.30 in illiquid trading during the Asian session. However, gold could not maintain these gains. But Morrison says market momentum is much different than it was a few months ago. The analyst comments:
Gold has been forming a base since rising above $2,000 in mid-February. Upward momentum is also steadily increasing. While a pullback is certainly possible, it would be surprising to see gold give back all of last week’s gains.
Gold is ready for a significant move!
FxPro Senior Market Analyst Alex Kuptsikevich states that momentum indicators are rising. That said, gold still has room to rise. He adds that with its current momentum, gold could target $2,255, which represents an important Fibonacci projection level. The analyst explains his views as follows:
Gold is poised for a significant move, second only to cryptocurrencies. Sometimes gold avoids volatility for weeks, but at certain moments strong multi-day trends are born and the movement becomes almost one-sided, as we saw this time.
The biggest threat to the market: Fed’s monetary policy
Many analysts are optimistic about the yellow metal as it gains momentum. However, some warn that the market still faces some major tests. ActivTrades Senior Analyst Ricardo Evangelista says the Federal Reserve’s monetary policy remains the biggest threat to the gold market.
Analysts say persistent inflation will force the Fed to maintain aggressive monetary policy for longer than expected. Some economists have even started pricing in all of this year’s rate cuts. Evangelista shares his assessment:
Given this backdrop, this week’s data releases, including the US services PMI and labor force figures, as well as Jerome Powell’s testimony to the US Congress, will be closely watched by traders and will likely influence gold prices accordingly.
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