Gold price is consolidating at the beginning of the week, but it is breaking out on the cards. Meanwhile, the US dollar continues its safe-haven pricing to three-year highs. The bears are taking over and dragging the gold price below the 4-hour trendline support, according to market analyst Ross J Burland. At the time of writing, gold was trading at $1,758.77, up 0.31%. For the gold analysis of the week cryptocoin.com keep reading.
Ross J Burland states that the precious metal price is trying to stabilize with a bullish correction according to technical analysis, however, the US dollar has been stronger in the Asian session so far. According to the analyst, DXY is heading towards 94.50-day tops and a break there would act as a headwind for bullion prices, possibly encouraging more flow to the dollar. The analyst predicts that a break below the $1,745 horizontal support could ignite a strong price in gold.
compelling reverse story of gold
Looking beyond Fed pricing, TD Securities analysts say that higher wages and an increase in participation rate will keep the stagflation theme alive and that gold may be an ideal hedge against these rising stagflationary headwinds. Analysts make the following assessments:
As the global energy crisis intensifies, affecting the production of goods worldwide and supply chains in Europe and Asia, the reasons for owning the yellow metal are becoming increasingly compelling. Indeed, as these problems flare up, slowing demand and rising inflation concerns, the price movement between rates in the last trading sessions, indicate that the global macro is starting to price out with the effects of the energy crisis.
While real rates were leading the Fed’s higher move in rates, it is now led by breakevens, suggesting that the market is priced in with higher inflation due to the spike in energy. Analysts agree, however, that it was a supply shock that negatively impacted growth. Analysts’ view is as follows:
With the increasing number of shorts including CTAs in the yellow metal, the potential strength of gold due to the growing stagflationary narrative could lead to aggressive shorts on the horizon.
Gold price technical analysis: Gold bulls step in
According to market analyst Ross J Burland, from a 4-hour perspective, targeting the 200-MA and the previous structure above it, gold bulls will be wary to see the price move, as the chart above shows in the analysis at the Asian opening this week. The analyst notes that the target’s near-term resistance is around $1,770, saying that a move above this area raises the possibility of a bullish continuation for gold this week.
Ross J Burland continues his analysis as follows:
Price remains consolidating below critical resistance. A breakout there would be expected to see the previous analysis continue. However, a break of the trendline support followed by a drop below the horizontal support is expected to result in a bearish continuation.
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