Gold Keeps Making Lower Highs in 2023, Indicating A Shift in Trend
Gold has been very volatile since the beginning of October, as the tensions in the Middle East grew, sending the safe-haven assets to a new record high by December. However, we saw a quick reversal lower and since then Gold has been making lower highs, which is an indication that the trend might be changing and sellers are in control.
Buyers have been attempting to turn the momentum around, but the rallies in Gold have faltered as buyers continue to keep the selling pressure on. However, they have to put a new low in place, below $1,973 which was the latest low in December, so the trend could be considered bearish. The Gold spike which we saw late last week after the US data has waned, with the USD continuing to display strength, while the 10-year Treasury yields continue to remain above 4.00%. The daily chart below illustrates the technical picture in gold:
Gold Daily Chart – The 20 SMA Might Have Turned Into Resistance
The feeling in the markets in January has been that the FED might keep rates higher for longer, and considering the stronger US economic numbers recently, not cut as much as it was expected in December. So, the market’s expectations for some early large rate cuts by the FED, together with an optimistic tone in stocks add further to the negative sentiment for Gold.
Yesterday we saw a generally favorable risk tone in the equities market, which triggered fresh GOLD selling on the opening day of a new week. At the start of the US session, we saw a quick dip to $2,016.50, but there was no follow-through after the break of the $2,020 support level.
However, yesterday’s break now exposes XAU/USD to the $2,000 psychological level. If the decline continues, it has the potential to push Gold lower toward the 100-day Simple Moving Average (SMA), which is currently around $1,974, and then further down to the 200-day SMA, which stands at $1,955. But, we will see how the USD will behave, as well as keep an eye on the Middle East where tensions continue to remain high
Gold XAU Live Chart
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