Ziwox Weekly Gold analysis

Gold Analysis – December 4, 2023

Fundamental View

The fundamental outlook for gold suggests a mix of factors influencing its trajectory. Analysts predict a bullish trend, with forecasts ranging from $1,800 to $2,060 per ounce in 2023, and a continued upward trend in 2024. However, challenges like waning demand, driven by rising real rates and a stronger US dollar, persist, undermining gold’s strength. Gold is influenced by fluctuations in the US dollar and yields. The rise of gold by 14% from November 2022 to early February 2023 was supported by a less hawkish tone from the US Federal Reserve.

The significant activity of buying gold by central banks with the net purchase of 800 tons of gold last year has been the main factor behind the positive performance of gold. In the absence of a clear catalyst, the increase in the price of gold on the day may be due to the execution of profit limits of long positions. In this case, we can have the possibility of a short-term retreat in the price of gold.

Latest Gold’s Rally

Gold crossed its August 2020 high due to expectations of a US interest rate cut and the cautious stance of the Federal Reserve. The Fed’s comments fueled the gold rally. Gold prices were further boosted by Federal Reserve Chairman Powell’s comments on the restrictive monetary policy stance. The comment led to a decrease in yields and the US dollar, favoring the rise of gold.

There is always FED in between

Amid speculation of impending interest rate cuts, Powell cautioned against premature expectations. This led to a cautious market, with gold prices reflecting a hesitancy to react to signs of the Federal Reserve delaying rate cuts.

Market Sentiment and Influencing Factors

Gold prices fell today from Monday’s highs, perhaps reflecting the market’s reaction to signs that the Federal Reserve is in no rush to cut rates.
This sentiment was reflected in the Treasury market as the 10-year yield rose. The upcoming US labor force data, which is expected to show rising wages and Iran’s steady unemployment rate, could weigh on gold trends.

πŸ“… Economic Calendar

Technical View

The medium-term outlook for gold looks upbeat, however, the potential for real rates to rise in the face of deflation may weigh on gold investments, while net long positions have increased. ETF holdings have not risen significantly, reflecting mixed sentiment. It is in the gold market.

Any talk and possibility of an interest rate hike by the Federal Reserve can bring the price of gold back to the 1850 area, and if the expectations of an increase in interest rates by the Federal Reserve continue to increase as in the past weeks, the price of gold will be above 50-20.

Our direction for gold remains bullish and dips can be bought. Significant levels for a buy scenario are the 2035 levels.

Long depended on Fed expectation by Alisabbaghi on TradingView.com

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Affecting news/events for gold

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Gold is supported by lower expectations of interest rates

XAUUSD Trade idea

Gold, which posted its biggest weekly gain since April as the dollar weakened and interest rate hike expectations eased, was boosted by declining inflation data.
Gold prices hit a one-month high for their biggest weekly gain since April. The rise comes as markets cut expectations of further U.S. interest rate hikes, sending the dollar to its lowest level in more than a year. This devaluation of the dollar makes gold more affordable for foreign investors, boosting demand and pushing up the price of the precious metal.

Fundamental Bias for gold is Bullish, Forecast is bullish too. check it on Ziwox Terminal

Gold data by Ziwox Terminal

Slower PPI growth dampens rate hike expectations

Slower PPI growth dampens rate hike expectations
Recent data on US economic indicators reinforce the shift in sentiment. US producer prices barely rose in June, indicating a deflationary phase in the economy. The lower-than-expected inflation rate and the decrease in the main producer prices have reduced the possibility of a sharp increase in interest rates by the Federal Reserve. Economists polled by Dow Jones had expected the June producer price index to rise 0.2 percent, but the actual figure was a weaker-than-expected 0.1 percent.

The decline in CPI reflects softening inflationary pressures

In addition, the consumer price index registered an annualized rate of 3% in June, the lowest level since March 2021 and below consensus expectations. These figures indicate a reduction in inflationary pressures, which further reduces the possibility of an immediate increase in interest rates.

Tight labor market

In a surprising twist, the number of Americans who filed new claims for unemployment benefits fell last week, signaling the continued tightening of the U.S. labor market. These positive data add to mixed signals about the economy and the appropriate course of action for the Federal Reserve.

Baezer’s expectations July meeting

While Federal Reserve Chairman Christopher Waller remains supportive of more rate hikes this year, sentiment among investors has shifted. Expectations for further hikes have eased, with the focus now turning to the Federal Open Market Committee’s upcoming meeting in July.

However, if the Federal Reserve hints at further interest rate hikes, it may cause concern among gold investors. And this is the only risk for gold buyers. Higher interest rates increase the opportunity cost of holding non-yielding bullion, potentially causing some investors to reconsider their positions.

Does gold reach $2,000 again?

Looking ahead, gold’s bullish momentum seems intact and experts suggest that the next key levels could be between $1988 and $2000. The short-term outlook has changed, creating bullish sentiment for gold prices.

Conclusion

Short-term outlook: A weaker dollar adds to the bullish outlook
As a result, gold prices benefited from a weaker dollar and reduced expectations of a sharp increase in interest rates in the United States. Recent economic data points to a phase of deflation that will increase a more accommodative approach by the Federal Reserve. While uncertainty persists, gold investors remain bullish, eyeing the potential for further gains in the near term.
The level of 1955 was suitable to enter a buy trade, but at the time of writing this analysis, the price has risen slightly. Therefore, we have to wait for the price to break above 1960 to enter the buying transaction. It will be aimed at 1970 and 1985 buyers. Potential support has been identified at 1941

Gold is supported by lower expectations of interest rates by Alisabbaghi on TradingView.com


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Ziwox Weekly Gold analysis

Weekly gold Analysis

Fundamental View

Gold has been unappealing to buyers for three weeks. Strong economic data and high inflation led to a drop in gold prices. For the third consecutive week, the price per ounce of gold fell, leading to renewed discussions of a June rate hike. This shift in interest rate projections is the primary explanation for the decrease in gold’s value.

The inflation growth rate has not decreased yet!

Macroeconomic data was the main driver of the market. The durable goods index, consumer spending, and US PCE inflation all exceeded projections. US Federal Reserve emphasized the PCE index, which peaked at 4.7% in April. The near 5% US inflation merits ongoing interest rate adjustments. 0.25% hike anticipated by investors.

The US dollar strengthened

While the ounce of gold is down, the US dollar is up. According to analysts, the gold ounce will likely be under pressure until the beginning of the third quarter of 2023 due to strengthening interest rate expectations. Meanwhile, the only debt crisis of the US federal government can support the gold ounce. Negotiations on raising the federal government’s debt ceiling are ongoing and have yet to come to a conclusion.

πŸ“… Economic Calendar

Technical View

It is still too early to talk about the formation of a price floor in the market. It is true that an ounce of gold has dropped from its historical peak of $125, but there is still no news of a price floor. It seems that the fair price of an ounce of gold is in the range of 1923 to 1945 dollars assuming US interest rate hikes in June and July.

According to the weekly chart of XAUUSD, the price has reached the upward trend line following the downward reversal from the rate of $2055. In this week’s trading, the ounce of gold will face the trend line again. It seems that the bearish momentum in the market has increased.

If selling pressures increase and the upward trend line is broken, the market structure will change to a downward trend its possible that the price drop to the first support area of $1,923, and the key support of $1,871

But if the trend line turns into support and the price crosses above the partial resistance of $1950, the market can start a new upward movement first up to the trend rate of $2000.

Weekly gold analysis by Alisabbaghi on TradingView.com

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Ziwox Weekly Gold analysis

Weekly gold Analysis

Fundamental View

Is gold still supported?

Although the ounce of gold had a rough week, falling almost $50 and experiencing its worst performance since February, we saw a bullish return to the market on Friday.

One of the biggest drivers for the ounce of gold was the strengthening of the US dollar. The price of an ounce of gold has an inverse relationship with the value of the US dollar. The US dollar strengthened in response to the country’s economic data and changed interest rate expectations. But last Friday, the head of the US Federal Reserve said interest rates may not rise much. He is concerned about the credit crunch in the American banking industry. Powell said that “financial stability tools have helped calm the situation. However, the developments in the American banking sector are such that they make financial and credit conditions difficult and will most likely harm economic growth, employment, and inflation. For this reason, perhaps there is no need for a quick and large increase in interest rates. And it happened that on Friday gold was supported in the range of 1950 and now it is trading in the range of 1980.

πŸ“… Economic Calendar

In the coming week, the FOMC Minutes will be published. In the meantime, the GDP data will be updated and the desired inflation index of the Federal Reserve (PCE) will be at the center of attention.

US federal government debt crisis

This is a sign that the Federal Reserve may keep interest rates on record from June. After the words
The head of the US Federal Reserve, market interest rate expectations were weakened. From the point of view of the market, the possibility of an increase of 0.25 percentage points in the interest rate in June has reached 10%. Before this, the market was preparing to stop interest rate hikes from June. Several officials of the US Federal Reserve have backed away from the idea of stopping interest rate hikes. Even hopes for a rate cut at the end of 2023 have weakened.
Before the words of the head of the US Federal Reserve, the market was preparing for a 0.25 percentage point increase in the interest rate in June and had abandoned the expectation of a rate cut until the end of 2023. For this reason, we saw a sharp fall in the price of an ounce of gold. But it seems that the Federal Reserve Chairman’s comments have caused a change in interest rate expectations.

Technical View

According to analysts, it is expected that the price of an ounce of gold will experience an upward return from the current levels. However, there is a risk of an ounce of gold falling into the $1,900 range. The first resistance of the market is the 1980 range and then the 2000 dollar range. The support area of the market is in the range of 1960-1950 dollars. If negotiations to increase the federal government’s debt ceiling fail, the price of an ounce of gold could stabilize above $2,000.

Is gold still supported? by Alisabbaghi on TradingView.com

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Core CPI at 0.4% or lower changes the stocks, and gold to Green

US CPI Preview: Core CPI at 0.4% or lower monthly component gives stocks, and gold the chance to advance and the greenback.

With all due respect to non-farm payrolls, inflation reports have been much more powerful in shaping the direction of markets. That’s because the Fed is focused on fighting inflation, while the labor market is calm.

The consumer price index is the number one inflation index and in it, the Core CPI MoM is the most important figure. This reflects the most recent changes in inflation that the Fed can influence by changing interest rates. Unsustainable costs of energy and food, (which are determined in global markets) are excluded.

The economic calendar points to 0.4 percent in April, a repeat of April’s figure. This represents an annual gain of around 5%, which is lower than the expected annual increase of 5.5%. That’s good enough to allow stocks and gold to resume gains and the US dollar to weaken.

0.4% would have a limited effect, while 0.3% would have a more significant effect. Any number less than 0.3% is already causing huge moves.

Conversely, if the core CPI rises by 0.5%, stocks and gold will suffer, while the US dollar will rise. The 0.6% level (seen at the end of last year) will already trigger massive moves.


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Ziwox Weekly Gold analysis

Weekly gold Analysis

Fundamental View

Buyers of gold in recession, or sellers of it for a stronger dollar?

Volatility in the bond market and uncertainty about interest rate cuts are pushing the dollar higher, dimming the appeal of gold (XAU).

Last week, the recovery of the US dollar affected the price of gold (XAU) and put pressure on gold. Because market participants assessed the possibility of the Federal Reserve raising interest rates in May. However, there are still many buyers and markets for gold, who see the fear of stagnation more strongly.

Now for this week. There are many things in the US economic calendar that will help traders know what to expect from the Fed. Investors are monitoring Economic growth data (GDP), jobless claims on Thursday, and PCE data on Friday. The GDP print is expected to grow at an annual rate of 2.0% during this period, which means that a recession is not imminent. And If the PCE index prints much higher than expected, it reduces the likelihood that the Fed will hold off on rate hikes in May, especially if economic data is generally positive.

With this data, Investors evaluate the interest rate increase in May. Although the market expects a 25 basis point hike on May 3, uncertainty surrounding the possibility of a rate cut this year has caused volatility in the US bond market. The volatility of the bond market causes the dollar to move.

πŸ“… Economic Calendar

The market is currently looking at a 25 percent hike, with the direction of travel determined by whether the Fed will hold off on interest rate changes after that. While this could support gold prices, the recent market rally and overly technical conditions mean there is still scope for a downside if the Fed’s rate outlook is confirmed. According to the CME FedWatch tool, there is an 84.6% chance of a 25% rate hike in May, with interest rate cuts expected later in the year. Higher interest rates reduce the attractiveness of non-yielding bullion.

Technical View

Gold has taken a downward trend in the four-hour time frame. This precious metal has locked itself in the $1960 to $2020 area. It shows that gold needs some drivers to rise or fall. Any sign of information that leads traders to fear further recession could push gold to the $2020-$2048 highs. But what we think is the better-than-expected print for the US economy makes more downward pressure on XAU.
Gold is currently trading at the price of $1982 dollars and is on a dynamic resistance. There is a possibility of a slight rise for gold at the beginning of the week, but we don’t have any rush to trade. If the economic data encourages us to sell gold, we will wait and do it in the $2000 to $2020 area, and if we going to buy gold, we will do it in $1960 or in the important key area of 1920 dollars.

Calendar events

Affecting news/events for gold

Thu Apr 27: 

πŸ‡ΊπŸ‡Έ USD Advance GDP q/q and Unemployment Claims

Fri Apr 28:

πŸ‡ΊπŸ‡Έ USD Core PCE Price Index and USD Employment Cost Index


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Gold price, affected by the weakening of the US dollar

Gold prices are under pressure from a weaker US dollar, and China’s economic recovery, but uncertainty about the Federal Reserve’s monetary policy is limiting growth.

Economic data suggest the economy is not yet close to recession, giving the Federal Reserve room to continue raising interest rates, despite being thought to be closer to the end of the rate hike cycle than other global central banks.

Traders are monitoring comments from Fed officials ahead of the April 22 blackout before the May 2-3 meeting.

The 10-year Treasury yield rose 8 basis points to 3.602 percent and the two-year U.S. Treasury yield rose 9.3 basis points to 4.196 percent, which typically reflects interest rate expectations.

According to CME’s FedWatch Tool, market expectations for a 25-point hike at the May meeting have risen to more than 86% (up from 78% on Friday).
This is the trigger for the decline of gold.
But on the other hand, China’s economic recovery weakened the dollar
However, gains in gold prices were limited by uncertainty over the US Federal Reserve’s monetary policy stance. Investors sought more clarity on the issue, which affected gold demand.

Despite this, news of China’s economic recovery picked up in the first quarter, with the country’s gross domestic product growing 4.5 percent year-on-year, beating expectations. This development increased demand for riskier assets, which in turn put some pressure on the US dollar and led to gold growth.
From a technical point of view, gold is trading within the ascending channel and is now at the bottom of the channel. The resistance level of 2003.55 is very important and the upward return of the price above this level will bring more buyers into the market. We should wait for the price reaction to the rate of 2003.55.

Overall, gold prices rose on Tuesday due to a combination of factors, including a weaker US dollar and news of China’s economic recovery. However, uncertainty over the US Federal Reserve’s monetary policy stance limited gains in the precious metal.


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Ziwox Weekly Gold analysis

Weekly gold Analysis

Fundamental View

Gold is still under buying pressure but it is at an important level

In the past week, gold was fixed above 2000 dollars. This consolidation was done right above the $2000 and $2002 area. Important and psychological area.
The momentum is still bullish and can rise again to its historical high. We mean the area of 2060. But this price jump definitely needs a catalyst as a driver.

The instability of the economy, the uncertainty in the decisions of the Federal Reserve to interest rate increasing cycles, the purchase of gold by central banks, the crisis of banks under the pressure of recession and inflation, as well as the decrease in bond yields make gold more attractive for buying than ever before.

If in the coming week, the employment data is higher than expected or if the inflation increases a lot, they can make gold fall sharply and return it to the previous level.

But any disappointing data or even close to expectations will stabilize gold in the current areas and even towards higher levels.

πŸ“… Economic Calendar


Technical View

Technically, gold is slightly overbought at current levels. But what is seen in the candlesticks (downward shadows) shows the pressure on buyers in this area.

If there is no better than expected data for the US economy (employers and CPI), any drop in the price of gold to a lower level can be considered as a correction and another opportunity for buying gold again.

any price drop considered as a correction and a BUY opportunity by Alisabbaghi on TradingView.com


Calendar events

Important events for gold:

USD CPI and Core CPI, FOMC meeting on Wed

Ziwox calendar on 2023-04-10

Ziwox Weekly Gold analysis

Weekly gold Analysis

Fundamental View

Gold Growth stopped at a strong level of $2000

Last week, we mentioned the buy sentiments of gold as a safe-haven asset.
Now that the market has priced banking crises what are the gold movement drivers?

Recession, yes fear of stagnation is remain. Fear of recession in the global economy remains and now the gold buyers are still in their long positions.

Why do the world’s banks buy gold?

On the other hand, the multi-polarization of economic powers and the formation of new regions in the east by China and Russia, and the declining influence of the US dollar as the global reserve currency has been the main driver of gold’s rally to the $2,000 level last week.
Undoubtedly, China and Russia intend to free themselves from the vortex of the global economy, which is heavily dependent on the US dollar. The concern about the extreme fluctuations of the dollar and the euro has caused the demand for gold to increase from the central banks of the world. Concerns about the trade war and the possibility of a currency war between China and the United States are also considered important factors.

Last week, we read in the news that China made its first liquefied natural gas transaction in yuan through the Shanghai Oil and Gas Exchange. Also, last week, China and Brazil announced that they will carry out trade and financial exchanges between them in Riel (Brazil’s currency) and Yuan, to which Saudi Arabia, the United Arab Emirates, and the Middle East have also been added. The result is less use of US dollars and more use of gold.

Technical View

The closing price in the previous month’s candle shows the strong power of major buyers of gold, and this defends the upward trend of gold in the long term.

From a technical point of view, we are currently in the overbought zone for Gold/XAU. This does not mean that gold will go down. Rather, we consider it only a price correction and collecting more liquidity at lower prices for new buyers.

$1955, $1937, and $1910 are our main support levels.

Gold Growth stopped at a strong level of $2000 by Alisabbaghi on TradingView.com

Calendar events

Mon Apr 3, ISM MANUFACTURING PMI (MAR)

Wed Apr 5, ADP NONFARM EMPLOYMENT CHANGE (MAR)

and on Fri Apr 7 NONFARM PAYROLLS (MAR) is our main event’s impact on gold.

Gold and important $2000 level

Gold traded above $2,000 on Monday but quickly fell to $1930

However, continued turmoil at banks and expectations that the Federal Reserve will be forced to cut interest rates this year helped gold rally again.

The $2,000 level has proven to be problematic for gold in the past, as gold closed above $2,000 for one day last March at the start of the Ukraine war, only to reverse the next day and fall to $1,625 by September.

This was the third time gold tested the $2,000 level. Technical analysts believe that when a resistance or support level is tested several times, that level will weaken and eventually break.

However, seasonally, gold is usually under downward pressure, so caution should be exercised when buying gold. At the same time, there is growing evidence that governments are buying gold, which could be an unstoppable force.

The growing alliance between Russia, China, and the Middle East countries is a reason for all of them to replace their dollar reserves with precious metals.

An early turn in contractionary policy would question the US central bank’s determination to fight inflation, and this would undoubtedly be a strong signal to buy gold.

Right now, the risk-to-reward ratio doesn’t look attractive for buying gold, but gold’s resistance this week is encouraging on days when fears of bank failures have calmed down a bit.

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