Gold markets fell a little to slice at $1,680 during the week of the process. According to analysts, as long as the Fed continues to tighten its monetary policy, you will likely see more.
“Golden bulls remain astonished”
Gold fell sharply on Friday as the Fed’s 75bps rate hike next month became more likely than expected. In a daily commentary, senior analyst Jim Wyckoff says gold continues to trade in strong reversal with the strong US dollar index (DXY). In this context, the analyst makes the following statement:
Gold bulls remain stunned by their metals’ failure to catch up with their safe haven offer amid heightened geopolitical and market uncertainties.
“This does not bode well for yellow metal in the near term”
On Friday, information showed US retail sales fell flat in September. The University of Michigan study found that consumer sentiment rose to 59.8 in October from 58.6 in the previous month, and consumer inflation expectations for the next year fell to 5.1% from a one-year low of 4.7% in September. proved to rise.
Investors also headed for a higher peak for interest rates as the Fed grappled with stubborn inflation. Craig Erlam, Oanda’s senior market analyst, highlights the following in a note:
Inflation data was disastrous for the yellow metal as it reinforced a 75 basis point hike from the Fed next month. Not only that, markets may need to go further than previously claimed, as inflation is apparently so stubborn. This does not bode well for gold in the near term. It is possible to test the lows around $1,640 once again soon. The next test after that includes the lows at the end of September.
Weekly gold technical analysis
Technical analyst Christopher Lewis illustrates the technical outlook for gold as follows. Gold markets fell quite a bit during the process week to break the $1,680 level once again. This is an area that is more valuable than once. That’s why we’ve seen a lot of destruction done by slicing multiple times over the past few weeks. Whether we continue to see this market drop from here depends on the bond market and, of course, the Federal Reserve itself.
Looking at this chart, the hammer from a few weeks ago is a pricey thing to watch out for. Because if we go down, then it is possible for the market to go down to the level of $ 1,600, or even to the level of $ 1,500, estimated. As a result, it offers such potential resistance, especially the $1,750 level. So it’s a market I’m not interested in trying to buy anytime soon. If we break that, we can start discussing about a measure change in trend. However, I don’t think this will be the case at the moment.
This is a market that has been dragging lower for a while. Also, there is no random reason to believe that it will change. Ultimately, I like the idea of rally selling. Before I buy gold, I expect the Federal Reserve to change its general stance. At this point it’s probably going to be a nice take-and-hold situation.