GOLD on the verge? New consolidation area prior to next move
GOLD is currently in what appears retracement state before new direction. Either price is gonna continue bear downtrend and break current confluence weekly support, or go above previous broken weekly support confluence level.
So far it's a range between two levels and price may stay there for next weeks coming. Monthly candle is still bearish as we approach mid month and liquidity appears to increase every time it hits 1700, so from short to mid term perspective price may push few more times this month. It will be interesting to see how monthly candle will look like after this week (this weekly candle's close). But as long as candle keep rejecting 1760-1770(*1775) there should be more opportunities to sell than to buy short term due higher timeframe co-relation.
LONG TERM FUNDMANETNAL OVERVIEW
Seems investors are keen to look for higer yielding assets rather than GOLD due this period of recovery and slightly better numbers. OIL and energy commodity sector outperformed metals due better return since these assests are finding demand after huge selloff and attract investors at times of higher inflation expectations. USD is still bearish but overall stronger than weak GOLD, therefore price falled down.
However if inflation keeps rising without data and numbers supporting the move, investors should think of GOLD because it's hard asset and considered risk-off asset in times of uncertainties.
So basically we need both growth and inflation to pick up together for real balance of the economy in order to see continuation of this downtrend, because then GOLD should not be considered as a inflation hedge (investors may look for gov or corporate bonds instead which should offer more safety due to stable growth and salaries pickup).
Naturally dollar should follow such circulation and get stronger to some degree because money spending should be justified and central banks would start to switch their bond stakes and take back given dollars reducing the quantity of money supply for longer term. This would affect interest rates too. But I assueme long time to see that.
SHORT-MID TERM FUNDMANETAL+TECHNICAL OVERVIEW
Dollar pickup would hurt the GOLD mostly of all assets due the current trend. US economy is on the better way to recover and looks the best country to invest when comparing to the rest of the developed countries. Naturally dollar would appreciate this scenario, so mid term I don't see any reason why GOLD should outperform dollar in this first half of the year. Next week US federal reserve bank will have decision with interest rates and should provide more information about the future. 10y rising yield benefits USD and trend is just starting, with refer to my open post statement I think it should continue so.
Technically each bounce off resistance should be selling opportunity. I would hesistate to buy GOLD at current levels since high confluence most recent broken support didn't get tested or broken and re-tested for trend overturn.
You can notice how each bounce back/pullback from the trendline did roughly 600-700 pips of move. If this pullback period already did it's move there's more chance to see sell continuation and reject off weekly zone/trendline.
Fib levels also support these confluence levels since 50% holds the lower bound of the dowtnred alligned with daily resistance and 60-70% can hold the weekly.
So far it's a range between two levels and price may stay there for next weeks coming. Monthly candle is still bearish as we approach mid month and liquidity appears to increase every time it hits 1700, so from short to mid term perspective price may push few more times this month. It will be interesting to see how monthly candle will look like after this week (this weekly candle's close). But as long as candle keep rejecting 1760-1770(*1775) there should be more opportunities to sell than to buy short term due higher timeframe co-relation.
LONG TERM FUNDMANETNAL OVERVIEW
Seems investors are keen to look for higer yielding assets rather than GOLD due this period of recovery and slightly better numbers. OIL and energy commodity sector outperformed metals due better return since these assests are finding demand after huge selloff and attract investors at times of higher inflation expectations. USD is still bearish but overall stronger than weak GOLD, therefore price falled down.
However if inflation keeps rising without data and numbers supporting the move, investors should think of GOLD because it's hard asset and considered risk-off asset in times of uncertainties.
So basically we need both growth and inflation to pick up together for real balance of the economy in order to see continuation of this downtrend, because then GOLD should not be considered as a inflation hedge (investors may look for gov or corporate bonds instead which should offer more safety due to stable growth and salaries pickup).
Naturally dollar should follow such circulation and get stronger to some degree because money spending should be justified and central banks would start to switch their bond stakes and take back given dollars reducing the quantity of money supply for longer term. This would affect interest rates too. But I assueme long time to see that.
SHORT-MID TERM FUNDMANETAL+TECHNICAL OVERVIEW
Dollar pickup would hurt the GOLD mostly of all assets due the current trend. US economy is on the better way to recover and looks the best country to invest when comparing to the rest of the developed countries. Naturally dollar would appreciate this scenario, so mid term I don't see any reason why GOLD should outperform dollar in this first half of the year. Next week US federal reserve bank will have decision with interest rates and should provide more information about the future. 10y rising yield benefits USD and trend is just starting, with refer to my open post statement I think it should continue so.
Technically each bounce off resistance should be selling opportunity. I would hesistate to buy GOLD at current levels since high confluence most recent broken support didn't get tested or broken and re-tested for trend overturn.
You can notice how each bounce back/pullback from the trendline did roughly 600-700 pips of move. If this pullback period already did it's move there's more chance to see sell continuation and reject off weekly zone/trendline.
Fib levels also support these confluence levels since 50% holds the lower bound of the dowtnred alligned with daily resistance and 60-70% can hold the weekly.