The recovery of the US dollar triggered gold’s pullback amid Covid and Ukraine troubles. However, Credit Suisse economists are optimistic about gold prices. In addition, market analyst Anil Panchal states that the options market is optimistic about gold.
“Gold will surpass the broader commodity complex”
Gold is above its 200-Day Moving Average of 1,785. Credit Suisse economists expect the yellow metal to extend its rise in real terms to $1,876/96. In this context, economists make the following statement:
At $1,876/96 and potentially beyond, there is room for more tactical interests to be mistaken. However, the overall environment remains volatile. This keeps our broader technical view neutral. With the Bloomberg Commodity TR Index (BCOM) weakening and gold stabilizing, the expensive metal has already reaped some benefits over the broader commodity index. Also, its relative base and technical proofs at the moment suggest that gold will continue to outperform BCOM over the next 6-12 months.
“Options market optimistic about yellow metal”
Traders identify concerns stemming from China’s Covid conditions and Ukraine. In this environment, gold prices are making a U-turn from their intraday high. Beijing has reversed its ‘Zero Covid’ policy. That’s why around seven major countries have recently announced their Covid testing requirements for Chinese tourists.
On the other hand, Russia’s refusal to make peace with Ukraine unless it accepts the compromising treaty on additional territories and also an escalating war in the city of Kherson suppresses market sentiment. On the other hand, yields on US 10-year Treasuries fell 3.0 bps to 3.85%. This, in turn, challenges the US Dollar Index (DXY) bulls and puts a floor below the gold price. Market analyst Anil Panchal makes the following assessment on gold:
It is worth noting that the options market seems optimistic about the yellow metal, with the latest RR for gold. Because the difference in the middle of the call and put reflects positively on the prices. However, the one-month RR reversed the previous monthly decline with the latest data of +0.430. It also targets the largest weekly information at 4 on a weekly basis.
From now on, weekly data on US Prime Unemployment Claims and Chicago PMI for December will be monitored for short-term parties. But great attention will be paid to risk catalysts and bond market movements during the year-end inactivity.
Gold prices technical analysis
Market analyst Anil Panchal draws the technical picture of gold as follows. A three-week ascending triangle is capping the gold price in the middle of $1,782 to $1,825. However, gold is currently retreating from the two-week upper sloping reinforcement border inside the indicated triangle to around $1,800.
It is worth noting that the downside MACD signals and the heavy pressures of the RSI (14) add strength to the downside trend. However, $1,780, the 200-SMA level, sees an extra snag for gold sellers before giving them control. Alternatively, a surge of $1,825 will not hesitate to challenge June’s high near $1,880.