Gold prices rose slightly on Wednesday, after four sessions of decline, despite the rise in the US dollar and a series of mostly optimistic US economic reports. At the time of writing, gold for December delivery was trading at $1,791.2, gaining 0.39% daily. This bruising session marked the lowest end for the most active contract since Nov. 3, and was followed by a 2.4% drop on Monday, the sharpest percentage drop since Aug. In the meantime, let us remind you that the US markets will be closed on Thursday for the Thanksgiving holiday.
An overview of developments in the markets
cryptocoin.com As you can follow in the news, earlier this week, gold price dropped to the psychologically important $1,800 gain level, as Treasury rates increased in a week shortened due to the holiday. Treasury yields rose slightly on Wednesday, at least among longer maturities. But strategists say the rise in the dollar is creating a headwind for dollar-pegged assets. Dollar Index DXY is heading for its highest level since summer 2020. A stronger dollar can make currency-priced assets like gold more expensive for offshore investors.
Economic data shows U.S. durable goods orders fell in October, weekly jobless claims hit the lowest level since 1969, international goods trade fell 14.6% in October, and gross domestic product fell by a slightly revised 2.1% year-on-year in the third quarter. showed an increase in rate. Other data also highlighted historically high levels of inflation, with the measure of the cost of goods and services rising 0.6% in October on a personal consumption expenditure index or PCE basis, up 5% year-on-year from 4.4% in September. This is the highest level since December 1990. It should be noted that the PCE index is the Federal Reserve’s preferred inflation indicators.
Jim Wyckoff: Gold bulls weaken this week
Investors are counting on a more hawkish approach to 2022 by newly appointed Federal Reserve Chairman Jerome Powell and the latest data showing continued economic strength. Senior analyst Jim Wyckoff, in a note to clients, comments:
Gold bulls have weakened this week and need to step up and show strength very soon to avoid serious short-term technical damage.
Jeffrey Halley, senior market analyst at OANDA, says investors are unlikely to go long again over the holidays:
Momentum will be muted and that means the $1,835 to $1,850 zone will cap gains this week. But I’d be surprised if we get as high as $1,810. If US rates hold steady this week, gold will be vulnerable to further losses.
Gold technical analysis: Yellow metal seeks to continue recovery from $1,582
According to market analyst Dhwani Mehta, XAU/EUR is looking to continue the recovery from the two-week low of $1,582, which it reached earlier this week. The analyst notes that the spot price is currently flirting with the $1,600 threshold as markets reassess potential risks from European Covid-19 restrictions, despite a minor decline in the euro. Dhwani Mehta highlights the following technical levels:
Technically speaking, XAU/EUR found strong support in the ascending 21-Day Moving Average (DMA), currently stopping its four-day losing streak at $1,592 on Wednesday. A daily close below the latter is needed to continue correcting at the 14-month high of $1,653.90.
The analyst states that two-week lows will be retested below the 21-DMA support, opening the ground for a drop to $1,575, the 10th November low. According to the analyst, if the selling momentum picks up, the bears will target the upward sloping 50-DMA at $1,550.
On the upside, he says, immediate resistance at $1,612 Wednesday’s high, above which the psychological level of $1,650 will attract buyers’ attention, pointing to the following levels:
The 14-day Relative Strength Index (RSI) sits above the middle line, indicating that there is room for the recovery to gain momentum. An acceptance above $1,650 could trigger a fresh rise towards the $1,700 threshold.
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