Gold used to be bearish until the beginning of November, as it lost the safe haven status and was acting as a risk asset, while the USD was rallying higher on a very aggressive FED. As a result, Gold fell to $1,616 until the reversal came as the USD turned bearish and the sentiment improved on less hawkish comments from central banks.
But hopes for a dovish turn from central banks proved to be premature and the European Central Bank absolutely hammered the point home. The ECB delivered a 50 bps hike and Lagarde followed with a hawkish commentary. The usual leaks show it was close to 75 bps and that another 50 bps is likely coming at the next meeting. Economists now see them going as high as 3.75% and the revisions are just beginning.
Gold H4 Chart – The 100 SMA Holding As Support
Gold is oversold on this timeframe
Jerome Powell sounded sort of mixed and yesterday the doubters of the long-term +5% rates got some help as well yesterday after a really disappointing US retail sales on all metrics but instead of strengthening resolve in a pivot, it added to worries about a hard landing of the US economy.
That turned the sentiment even more negative and GOLD fell to the 100 SMA (green) which is acting as support. On the Daily chart at the top of the article, the 20 SMA (gray) has been providing support and now the 200 SMA (purple) has joined as well, so we decided to open a buy signal here hoping for a bounce higher.
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