December 3, 2022
  • December 3, 2022

Technical analysis of gold: stopped by the recovery of the dollar

By on December 20, 2021 0

Although the world’s central banks have decided to tighten their monetary policies, including those that have actually raised interest rates, appetite for safe havens has grown amid global fears of the threatening Omicron variant. a worldwide closure at Christmas. As a result, the price of gold returned to the resistance level of $ 1815 before closing its trade around the $ 1798 level, with the US dollar rallying. The price of gold has been rising 1.3% weekly, reducing its year-to-date decline to less than 5%.


As for the price of silver, the sister commodity of gold, it is trying to regain the high of $ 23. Silver futures reached $ 22,555 an ounce. The white metal is also expected to post a weekly gain of around 1.5%.

The price of gold was falling when the US central bank planned to stop purchasing pandemic-era assets in March and start raising interest rates soon after. Additionally, the European Central Bank (ECB) has announced that it will close the page of its emergency pandemic purchasing program in March. The Bank of England (BoE) shocked the markets with a 15bp rate hike.

Commenting on what happened, Pierre Verrett, technical analyst at ActivTrades, wrote in a daily note: the assets. In addition, the recent decline in the US dollar following the Federal Reserve’s monetary decisions has further supported safe-haven stocks and commodity markets in general.

The precious metal halted its gains thanks to the strength of the dollar. The US Dollar Index (DXY), which measures the performance of the dollar against a basket of other major currencies, rose to 96.17 and, as is known, the DXY US Dollar Index is on its way. to make a lukewarm 0.1% jump last week. . From the start of the year to date, the index has increased by 7%. The US Treasury market is heading mostly red, with the 10-year yield falling to 1.38%. The value of one-year bonds fell to 0.241%, while the yield of 30-year bonds fell to 1.812%.

As for the prices of other metals, copper futures were unchanged at $ 4.308 per pound. Platinum futures reached $ 932.40 an ounce. Palladium futures reached $ 1,792.00 an ounce.

The British Minister for Health has refused to rule out stricter restrictions on the coronavirus before Christmas amid rapidly increasing infections and continued uncertainty over the Omicron type. “There are no guarantees in this pandemic, I don’t think so,” Javid replied when asked about the possibility of further restrictions. “At this point, we just have to keep everything under control. “

British Prime Minister Boris Johnson this week reinstated rules requiring face masks in stores and ordering people to show proof of vaccination or test negative for coronavirus before entering nightclubs and other places overcrowded. But government science advisers have recommended more extensive restrictions to prevent hospitals from overcrowding, according to the leaked minutes of a meeting of the Science Advisory Group for Emergencies.

Overall, countries in Europe are set to reimpose tougher measures to stem a new wave of COVID-19 infections spurred by the highly transmissible variant of omicron.

Technical analysis

I still see that the stability of the price of gold above the psychological resistance of $ 1800 will give the bulls enough momentum for further upward movement. The closest resistance levels are $ 1818, $ 1827, and $ 1845 which may make the general trend upward. On the other hand, the support level of $ 1775 will remain crucial for the bears to control the trend. Overall, I still prefer to buy gold at all bearish levels. The price of gold will be affected today, in the absence of major economic releases, by the level of the US dollar and the extent to which investors take risk or not.