Gold prices rose on Tuesday despite weak trading after the long Christmas weekend. This was due to the fact that the decline in the dollar made the dollar-priced bullion cheaper for offshore buyers. Analysts interpret the market and analyze the technical outlook of gold.
“Sustainable improvement in gold prices is possible if the Fed returns”
Gold started the first week of the year with an increase. Spot gold was trading at $1,809, up 0.63% at press time. US gold futures rose 0.79% to $1,818. In the middle, the dollar index (DXY) fell 0.2%.
The National Health Board announced that China, the largest gold consumer, will lift the quarantine requirement for arriving passengers from January 8. OCBC FX strategist Christopher Wong says risk sentiment has improved as China eases lockdown rules. In addition, he notes that the softening of the dollar has helped gold prices. Wong also makes the following assessment:
Amid aggressive monetary tightening, rising real yields and a stronger dollar, gold was weak for most of 2022. However, with the Fed’s policy adjustment mode, the situation reversed. If the Fed returns, sustainable smoothing in gold prices is possible.
Gold prices technical analysis
Market analyst Sagar Dua analyzes the technical outlook for gold prices in the following form. Gold prices surpassed Friday’s high of $1,804.00. It will likely shift its auction profile above the $1,800.00 spiritual resistance later on. It is possible for the precious metal to maintain its upward momentum with the improvement in the risk appetite of market participants.
Gold prices rebounded after testing the bottom of the Rising Channel chart pattern formed on a four-hour scale. The upper part of the above-mentioned chart pattern is placed at around $1,786.55, the 15th November high, while the lower part is placed at the $1,740.00 low of the 29th November. The 100-period Exponential Moving Average (EMA) at around $1,791.00 has been a valuable anchor for gold prices. Here, the Relative Strength Index (RSI) (14) gained strength after falling near 40.00. This shows that the downward movement is finite.
Gold prices technical view
Technical analyst Anil Panchal explains what he saw in the technical photo of gold. Gold prices rose after jumping from the 200-Day Moving Average (DMA) of about $1,782. The corrective bounce is not much of a buyout, but takes cues from the tighter pressures of the RSI (14).
However, downside MACD signals and an upper sloping resistance line near $1,821 from Dec. 5 are challenging the precious metal’s further upside. In a situation where gold buyers manage to break through the $1,821 barrier, successful trading above the monthly high of $1,825 becomes necessary for gold to strengthen.
On the downside, a daily close below the $1,782 200-DMA reinforcement is likely to quickly push bullion prices to the monthly low of around $1,7695. Following that, a drop near $1,740 and $1,721 at the end of November is likely to entice gold sellers. Overall, gold traders expect further progress despite the recent drop in prices.