🧈 Gold what next, better check and find out;) 🧈

In the past week, gold prices experienced a notable surge, not so much due to the generosity of the holiday season, but rather fueled by investor exuberance anticipating the Federal Reserve's move to cut interest rates in the coming year, possibly as early as March.

The week began with gold prices holding relatively steady around $2025 per ounce, with expectations that the market would maintain this trend ahead of Friday's release of inflation data through the PCE Price Index. However, on Tuesday morning, there was a sudden uptick in gold prices, reaching above $2045, driven more by investor positioning and sentiment rather than concrete data or news.

Despite a relatively sparse week for economic data, attention was drawn to the Philadelphia Fed's Manufacturing Index on Thursday, given recent softening in the US industrial sector and the push for the FOMC to halt its series of rate hikes. The index came in well below expectations (-10.5 on the survey index vs. -3.0), leading to another boost in gold prices. This upward momentum was likely a combination of expectations for a lower interest rate environment and gold's traditional role as a safe-haven asset during economic instability.

Unexpected increases in gold prices positioned the metal strongly ahead of Friday's main event—the November update of the PCE Price Index, considered the FOMC's preferred measure for inflation in the US economy. Despite the primary inputs to the PCE number being reported in the preceding week, there was another boost as both the annualized headline and "core" PCE prints reflected cooler inflation data than expected. This deflationary signal, coupled with downward revisions to the prior month's readings, typically a sell signal for gold prices, instead propelled the precious metal even higher. The peak on Friday reached $2070 post-PCE, though it moderated in the final trading hours to settle just below $2060 per ounce as investors and money managers seem fully committed to projections of interest rates coming down in the first quarter of the upcoming new year.

Heading into the post-Christmas period, the trading dynamics are expected to shift, with the next three weeks featuring lighter volume and more limit/stop-order trading. This period, often characterized by reduced market participation and the risk of exacerbated price swings, could see gold closing out 2023 on a positive note from this week's perspective.

Considering the seasonality trends, gold appears poised for potential gains until the end of February. Historically, gold has exhibited strength during the early months of the year, and the current positive momentum, driven by expectations of lower interest rates and economic uncertainties, may continue to support its performance. Investors often turn to gold as a safe-haven asset, especially in the face of market volatility and changing economic conditions. As the holiday season winds down and market activity may be lighter in the coming weeks, gold's seasonal resilience could see it maintaining a favorable position through the end of February.

Looking at the technical aspects, the current scenario suggests that there is a support zone around the $2040 mark for gold prices. This level seems to have acted as a solid foundation during recent fluctuations. On the upside, potential resistance zones are observed around $2060 and $2080. These levels have presented challenges for further upward movement, indicating a zone where selling interest might intensify. Traders and investors will likely keep a close eye on these key levels as they navigate the gold market, with the $2040 support and $2060 and $2080 resistance zones shaping the near-term price dynamics.

Furthermore, it's worth noting that the current market conditions suggest the presence of an upward trend channel. The price movements within this channel indicate a consistent pattern of higher highs and higher lows, reinforcing the bullish sentiment for gold.

Taking all factors into consideration, my scenario envisions the continuation of gold price growth, provided that no unforeseen "black swan" events occur. The combination of positive momentum, seasonal tendencies, established support at $2040, and the upward trend channel, along with resistance zones at $2060 and $2080, collectively suggests a favorable outlook for gold. However, it's crucial to acknowledge that unexpected and significant events, often referred to as "black swan" events, could introduce unpredictability to the market. Barring such unforeseen developments, the current conditions seem to support the potential for further upside in gold prices.

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