“There Is A Lot Of Risk This Week” Analysts Announce The Next One For Gold!

Gold struggles to extend its 2021 gains in the early hours of 2022 and pulls back towards the $1,820 levels on Monday as market sentiment wanes for a quiet day. According to market analyst Ross J Burland, the yellow metal is currently on track for a test of $1,850 according to technical analysis.

Yellow metal gains support from DXY weakness

cryptocoin.com As we have reported, the fact that major stock markets in the Asia-Pacific region are closed due to holidays and the absence of big data/events causes the markets to be inactive. Mixed concerns over the Omicron variant are also testing gold buyers at multi-day highs, in addition to multiple market declines and a lack of key catalysts. While daily infections in key global economies remain near record levels, policymakers are citing scientific studies that show Omicron is less severe to stay hopeful.

However, the US Dollar Index (DXY) is rebounding around a one-month low of 95.60, which leaves gold buyers questioning its multi-day high. Despite this, S&P 500 Futures remains stronger, gaining 0.35% for a day near 4,775, keeping buyers hopeful. On the other hand, the latest data of US Markit Manufacturing PMI for December may offer moderate hints on gold prices. But it’s clear that Friday’s U.S. Non-Farm Payrolls (NFP) will be given a lot of attention.

Real interest rates remain low as gold benefits from dollar weakness and strong global equities. However, in the absence of any new marginal hawk development, gold could struggle to climb much higher from here beyond the next tier of technical existence.

“Gold may start to lose its strength due to Fed expectations”

“For the hawkish Fed, well-priced precious metals markets and the upside CTA have been the main driving force keeping the yellow metal high, as evidenced by falling ETF holdings and a slide towards shorts in the latest CFTC data,” TD Securities analysts said. However, analysts also note that as long as Fed expectations remain the status quo, the yellow metal may begin to lose its strength:

In this sense, Omicron fears and their potential impact on the economy will be a key focus in the near term. We’ll likely have to see how economic weakness casts doubts that the Fed can maintain its hawkish stance for the yellow metal to sustain the recent momentum.

In that sense, this week it will release the minutes of the Federal Open Market Committee after the Fed’s move to double the tapering rate with a significantly more hawkish dot chart projection. Investors will look for clues about how hawkish the Fed will be in the first quarter of 2022. Additionally, US President Joe Biden’s nominations for the three vacant Fed seats may draw attention. By the end of the week, the US job market will be back in fashion with the US Non-Farm Payrolls report. TD Securities analysts make the following assessment:

The Covid spike in late December likely came too late to prevent a rebound in US payrolls after November’s (210k) gains were seen to be held back by an overly aggressive seasonal factor.

Gold technical analysis

Market analyst Ross J Burland notes that gold meets critical resistance near $1,830 and is focused on resistance and prospects for a correction such as below in the very near term.

According to the analyst, the above 4-hour chart shows the formation of a W-pattern, which is a reversal formation that is expected to retest the price to previous highs and even the neckline of the W-formation.

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