The gold price fell sharply as Frederal Reserve continued its aggressive stance to curb stubborn inflation. In this environment, the gold price continues to paint a negative picture for Credit Suisse. Commerzbank says the yellow metal will struggle to make permanent profits.
“Only in this case, it is possible to ease the pressure on the gold price”
The yellow metal below $1,691/76 confirmed a major double top. That’s why strategists at Credit Suisse reversed their medium-term technical view on gold. In this context, strategists draw attention to the following technical levels:
Gold recently dropped below the two-year low and the 200-week moving average at $1,691/76, indicating a major ‘double top’ formation. Therefore, we changed our medium-term technical outlook for gold to negative. With reinforcement initially seen at $1,618/16, we expect more deterioration from here.
According to strategists, a close below $1,618/16 will pave the way for a 50% retracement of the entire 2015-2020 rally from $1,560. Strategists further see the possible progression of shiny metal to the following levels:
Any break below this will open the door to extend the decline to late 2019 and 2020 price lows, as well as the 61.8% pullback at $1,451/40. On the contrary, a mere convincing break above the 55-day moving average, currently at $1,732, could ease the pressure on the price metal and the next resistance will be seen even more valuable at the 200-day average currently at $1,830.
“Gold has little to offer”
Koindeks.com As you can follow, gold is seeing the process close to the lowest level of the year. Commerzbank economists expect gold to remain under pressure. However, a short counter move is possible in the gold market. Economists make the following assessment:
Amid rapidly rising interest rates, gold has little to offer as an interest-free investment. Especially since it creates an additional burden on the strong US dollar price. This is why many ETF investors continue to withdraw their holdings. A small upside counter move is possible next week. However, we do not expect a permanent return until an end to interest rate hikes is seen.