Gold prices were all over the week as he tried to figure out which way to go in the longer term. The Wall Street Journal’s report that the Federal Reserve will likely start slowing rate hikes after its November monetary policy meeting was a lifeline for the gold market, which slumped to a two-year low.
“Fierce environment for gold prices is still here”
Gold prices managed to close the week above $1,650, which is a short-term value spiritual level for many investors and technical analysts. Unfortunately, gold investors were frustrated in their earlier false hopes. Now, the markets are whispering about a potential pivot. So gold investors jumped into the market and created a short-term buying spree.
Koindeks.com As you follow, we’ve seen rallies so far this year to be short-lived. For the truth is that, always with high inflation, the Federal Reserve and other global central banks have not yet finished tightening their monetary policy. It is possible that the Fed will slow rate hikes until 2023. However, expectations for a firm interest rate above 5% remain. Until that changes, the US dollar will continue to see significant bullish momentum, according to many market analysts. Market analyst Neils Christensen comments:
It’s not just in US dollars. The Federal Reserve’s tightening cycle pushed 10-year yields above 4%, the highest since 2008. Actual returns as measured by Treasury Inflation-Hedged Securities (TIPS) are trading at 1.7%, a 13-year high. Whichever way you look at it, this is a violent environment for gold and precious metals.
“Now is not the time to buy!”
For now, “patience” remains the key word for gold investors. This was the main theme during the London Bullion Market Association’s Global Precious Metals Conference. Gold remains an attractive long-term asset. Many analysts say that now is not the time to buy, as the US dollar and rising interest rates will keep gold in check.
We agree that the market is fierce. However, many analysts say that when the Fed Funds rate peaks, it highlights the potential for boom below solid physical demand. Neils Christensen interprets the current situation as follows:
What makes this new gold rally slightly different and sustainable is, of course, that consumers are starting to feel the effects of rising interest rates and tighter market conditions are turning financial markets upside down.
So what should you invest in?
The great uncertainty in the British bond market and the collapse of the Truss government after only 44 days in power show just how turbulent the global economy is. At the same time, the BOJ is constantly intervening in the foreign exchange markets to protect its economy from the unprecedented strength of the US dollar.
Even some great economists warn of a significant threat of calm looming on the horizon. Roubini Macro Associate CEO and professor at NYU Stern School of Business, Dr. Nouriel Roubini, nicknamed the apocalypse, wrote in a recent comment that it is possible for the US to enter a recession by the end of the year. He warns investors that in the next decade, the world may face ‘an unprecedented Stagflationary Debt Crisis’.
In this environment, Roubini also says, consumers need to invest in assets to protect themselves against inflation, geopolitical risk and environmental damage. In the middle of these are short-term government bonds and inflation-indexed bonds. In addition, gold and other precious metals and real estate are in the middle of these assets. The last rally underneath is likely to be short-lived. However, there is a feeling that investors should focus on the long-term potential.
Gold prices weekly technical analysis
Technical analyst Christopher Lewis draws attention to the following in his technical photo of gold this week. Gold markets went back and forth throughout the week. Because it is now under the threat of a fresh break and falling to a new low level. But there is some light on the market. In addition, the BOJ intervened in the Forex markets on Friday by selling US dollars. This broke the market. They gave it a little breather. However, at the end of the day, it is unlikely to hold. The fact that central bank manipulation can happen from time to time is obvious. However, we need to look at the overall picture and continue to see the future.
At this point, if it goes below the weekly candlestick, the expense will likely go much lower. Presumably, it is possible to fall to the level of $ 1,600. After that, the market is likely to see a move up to the $1,500 level. Looking at this chart, we see that a random rally is likely to meet valuable resistance near the $1,680 level. Next, there is resistance at $1,700 where the 200-Week EMA is likely. Either way, I wouldn’t consider going long until I got there. At this point, exhaustion will probably reveal itself again.
I don’t like gold, at least as long as US interest rates continue to be higher. This works against gold. Of course, the strengthening US dollar does the same thing. I’m not considering buying the shiny metal until the Federal Reserve changes its monetary policy.