After the recovery seen in the final part of October, the gold price is continuing to ease slightly. This decline could be explained by a mix of factors. In particular, last week US Fed chair Powell’s remarks have been seen as relatively hawkish. Markets are still facing a strong U.S. Dollar, combined with the rebound of Treasury yields. In other words, rate cuts are still far away.
Moreover, as we pointed out in some recent comments, the recovery seen in the final part of October (from $1,820 to $2,000 an ounce) has been extremely quick and gold is retracing due to some apparent profit-taking.
From a technical perspective, the breakdown of the support zone of $1,950 represented a weakness signal, confirming the bearish pressure of the last few days. The next key levels are placed at $1,920 and $1,900.
Despite the recent decline, the uncertainty remains significant. Firstly, the geopolitical scenario remains incandescent, as the conflict between Israel and Hamas appears far from an end. Moreover, in case the U.S. and global economies will slow down, the Federal Reserve and all major central banks could be forced into a quick U-turn on monetary policy, starting to cut rates in 2024 after over two years of interest hikes. Of course, this scenario could represent another bullish catalyst for the yellow metal.
Carlo is an external market analyst for Kinesis Money. With a credential background in Economic Finance and International Exchange (MA), Carlo’s critical analysis of gold and silver markets’ performance is frequently quoted by leading publications such as Forbes, Reuters, CNBC, and Nasdaq.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
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