- After another drop of more than $ 30, gold prices have stabilized above the $ 1,800 level for now, weighed by risk appetite.
- Gold’s 200 DMA sits just below $ 1,796, while significant resistance is to the upside at $ 1,850.
El or (XAU / USD) appears to have survived a test of the $ 1,800 psychological level for now, with buyers getting ahead of the November 2011 and October 2012 highs (at $ 1,803 and $ 1,796 respectively). Gold prices have moved within a tight range of $ 1,802 – $ 1,807 in the last few hours, as gold market participants catch their breath before the next move. As it stands, precious metals trades are down more than $ 30 on the day or 1.8%.
Risk appetite undermines demand for precious metals
Precious metals have taken a beating so far this week, with silver prices falling nearly 4% and gold prices nearly 3.5%. The sell off was initially triggered by positive new vaccine news from AstraZeneca ahead of Monday’s European cash opening. Better-than-expected vaccine news in November has given market participants more confidence that the global economy can enjoy a strong post-pandemic economic recovery in 2021, reducing demand for safe havens such as gold and silver. .
Additionally, precious metals markets took a further hit later during Monday’s European session with much stronger-than-expected US PMI Markit data for November, showing that vaccine optimism had more than offset. concerns about the return of the closes during the winter as a revealing of higher inflationary pressures throughout the economy.
Other evidence of the stronger-than-expected performance of the US economy came Tuesday in the form of much stronger-than-expected S & P / CaseShiller house price data, which sent prices up 6.6% year-on-year in September.
Analysts argue that such robust data, combined with recent optimism about vaccines and the fact that U.S. equity markets are at or near record highs, undermines the case for further stimulus from the Fed. in December. Most still expect the Fed to extend its QE purchases to longer-term maturities, but the argument for increasing the total size of monthly purchases to $ 80 billion has been clearly weakened by recent events.
With the above in mind, precious metals, which typically do well when central banks ease when market participants hedge against the risk of higher future levels of inflation, have not done well so far. the week, and the fall might not be over yet.
Gold is trading at its lowest since July
XAU / USD is currently trading at its lowest levels since mid-July and has entered a key mid-July range of $ 1,790 – $ 1,820. Therefore, apart from the $ 1,800 level, the upper and lower limits of this range are likely to present key areas of support and resistance.
Another significant level of support on the downside will be gold’s 200-day moving average (DMA), which is just below current levels at $ 1,796. If the bottom of the mid-July range and the 200 DMA go (that would mark the first drop for gold below its 200 DMA since March), then that would open the door for a test of the next major support area. at $ 1,766 (May 18 high).
Conversely, if the bulls roar again and the precious metal breaks above the mid-July range, significant resistance is at $ 1,850 (the lows of November 9 and September 24, 25 and 26).
Monthly chart
Technical levels
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