Are Gold Prices About To Fly?
Gold prices have been on the defensive this week as yields on US Treasuries crept higher, but the precious metal has so far managed to hold above the yearly low.
This could be a sign that bulls are still in control, as long as gold can stay out of the oversold territory on the Relative Strength Index (RSI). Gold prices have been on the rise recently, and here's what you need to know about it.
Gold prices have been on the defensive this week as yields on US Treasuries crept higher, but the precious metal has so far managed to hold above the yearly low. This could be a sign that bulls are still in control, as long as gold can stay out of the oversold territory on the Relative Strength Index (RSI).
Following the failed attempt to break the yearly low ($1681), gold appears to be trapped in a narrow range, but bullion might recover towards the 50-Day SMA ($1747) as the Relative Strength Index (RSI) returns ahead of oversold territory.
After dipping to a fresh weekly low of $1692, the price of gold is beginning to rebound. If bullion can hold above the monthly low of $1689, we may see a larger rebound over the remainder of the week.
Brainard's recent speech strongly suggests that the central bank will keep to its current plan of raising interest rates over time, to return inflation to the2% target. It seems as though the Federal Open Market Committee (FOMC) will continue to implement higher interest rates over the coming months as stated by Brainard that “monetary policy will need to be restrictive for some time” to provide confidence that inflation is under control.
Gold prices may continue to follow the negative trend in the 50-Day Simple Moving Average ($1747) as Chairman Jerome Powell and the Federal Reserve prepare US households and businesses for a restrictive policy. The chances of a 75bp rate hike at the next FOMC meeting on September 21st have increased to greater than 70% according to the CME FedWatch Tool.
The price of gold will likely continue to respond inversely to changes in Treasury yields as the Federal Reserve remains committed to its current monetary policy. It is unclear if or how the central bank might change its forward guidance in order to achieve a soft landing for the US economy.
In other words, the failed attempt to test the yearly low could cause a short-term increase in gold prices, but it is still likely that gold will largely follow the negative trend from last month.
The gold price is shown in the chart below, which was sourced from Trading View.
- The recent decline in the price of gold appears to have halted ahead of the yearly low ($1681) as the Relative Strength Index (RSI) reverses above-oversold territory, with failed attempts to break/close below $1690 (61.8% retracement) and $1700 (61.8% expansion) region raising the prospect for a move towards the 50-Day SMA ($1747).
- To put it another way, to appear on the radar, a close above $1726 (a 38.2 percent retracement) is required, with the next potential target area around $1761 ($78.6 percent expansion) to$1771 ($23.6 percent retracement).
- Bullion, on the other hand, may follow last month's price movement if it continues to track the negative slope in the moving average and breaks the monthly low ($1689) along with a close below the $1690 (61.8% retracement) to $1695 (61.8% expansion) zone, bringing back yearly lows ($1681).
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What do you think is causing the recent surge in gold prices?
Do you believe that gold is in a bull market?
Why do you think some investors are choosing to invest in gold instead of stocks or bonds?
How do you see the future of the gold market?
Will the current bull market for gold continue?
Submitted September 08, 2022 at 01:07PM by Ok_Average4810
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