Bullish Sign in Gold As It Bounces While MAs Hold
Gold has been displaying bullish momentum since early November and on Friday we saw a bounce off MAs, which is another bullish sign
Gold used to be very bearish from March this year until early November during a period of heightened uncertainties across many sectors, as it lost its safe haven status. Moving averages were acting as resistance on the daily chart above, particularly the 50 SMA (yellow) and the price fell to $1,6150 at some point, where it formed a support zone.
So the support zone held and the US started turning bearish as a result of the FED softening the rhetoric and actually slowing down with rate hikes, after the last hike earlier this month was only 50 basis points (bps) against 75 bps in the last several meetings. Gold surged higher, reaching $1,824 which means gaining more than $200.
Moving averages provided some resistance on the way up, but they were eventually broken. Although buyers couldn’t hold the gains above $1,800 and it has continuously retreated back below. Although highs keep getting higher and so are the lows, which means that the trend is still bullish and moving averages are acting as support, with the price bouncing off the 20 daily SMA (gray) and 200 daily SMA (purple) on Friday.
Gold H4 Chart – The 100 SMA Holding As Support
The trend seems uninterrupted in the H4 timeframe
On the H4 chart, we see that the trend has been bullish since buyers pushed above the previous support area around $1,680. After the initial surge, we have seen several retreats, but the 100 SMA (green) has been holding strong and on Friday we saw a decent bounce off that moving average. So, buyers remain in charge in Gold and FED’s Daly who is the mouthpiece for Jerome Powell didn’t offer much, which leaves the situation as it is for Gold, bullish.
Comments from San Francisco Fed President
- We are resolute and focused on bringing inflation down
- My inflation projection has gone up
- We feel a slowdown coming and we still have a long way to go
- We are far away from price stability goal
- Goods inflation has been falling, that’s what we’ve been hoping for
- Same can be said of house-price inflation
- Core services ex housing inflation is still quite elevated
- Services inflation usually takes quite a bit longer for that kind of inflation to come down, as it’s related to the labor market
This is in line with what Powell said, which is usually the case with Daly.
Gold XAU Live Chart
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