The new week started with gold extending the decline seen in the final hours of Friday, with a correction that could also be linked with the rebound of the USD. Bullion is traded at around $1,950/1,960 with a graphical and technical scenario slightly weakening.
From a technical perspective, the price seems to draw a “head and shoulders pattern”, which could potentially open space for further decline, once confirmed.
Despite this, gold is still looking for a clear directionality, after the recent gains that brought the price up to $2,010 per ounce. There are support zones placed at $1,935 and $1,920, while a recovery to $1,980 would denote strength.
Overall, central bank policy remains the biggest market driver and investors are trying to predict and anticipate their next moves. With one month to go to the next FOMC meeting, the market is almost evenly split over the possibility of no move in the Federal Reserve’s rates, or a 25 basis point increase.
In addition to this, it still seems more likely that rates will start to decline in the second half of 2023, but the timing and the amount of rate decrease are still unclear. The Fed, as well as other central banks, continues to evaluate the effect of the recent banking crisis and the risks of it spreading in the system. Moreover, the next data about inflation will be another crucial element for the decisions of policymakers.
Despite this, gold still remains in a solid position. Indeed, it can play a key role in case of further turmoil in the banking sector or the stock market and will be supported further as the tightening process of the central bank draws to a close.
Carlo Alberto De Casa is an external Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. His precious metals market commentary has featured in the likes of Forbes, Reuters, CNBC, and Nasdaq.
With a credential background in Economic Finance and International Exchange (MA), his critical analysis of gold and silver markets’ performance is frequently quoted by leading publications, week on week.
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.