The recovery of the US dollar triggered gold’s pullback amid the Covid and Ukraine woes. However, Credit Suisse economists are optimistic about gold prices. Also, market analyst Anil Panchal states that the options market is optimistic about gold.
“Gold will surpass the wider commodity complex”
Gold is above its 200-Day Moving Average of 1,785. Credit Suisse economists expect the yellow metal to extend its rise towards $1,876/96. In this context, economists make the following statement:
There is room for more tactical gains towards $1,876/96 and potentially beyond. However, the overall environment remains volatile. This keeps our broader technical view neutral. With the Bloomberg Commodity TR Index (BCOM) weakening and gold stabilizing, the precious metal has already made some gains relative to the broader commodity index. Also, its relative base and technical evidence at the moment suggests that gold will continue to outperform BCOM over the next 6-12 months.
“Options market optimistic about yellow metal”
Traders identify fears stemming from China’s Covid conditions and Ukraine. In this environment, gold prices are making a U-turn from their intraday high. The precious metal, however, is consolidating its intraday gains in doing so. Meanwhile, cryptocoin.com As you’ve been following, virus cases are increasing rapidly in the dragon nation. Beijing has reversed its ‘Zero Covid’ policy. That’s why around seven major countries have recently announced their Covid testing requirements for Chinese tourists.
On the other hand, Russia’s refusal to make peace with Ukraine unless it accepts the agreement compromising additional territories, as well as an escalating war in the city of Kherson, weighs on market sentiment. On the other hand, yields on US 10-year Treasuries fell 3.0 bps to 3.85%. This, in turn, challenges the US Dollar Index (DXY) bulls and puts a floor below the gold price. Market analyst Anil Panchal makes the following assessment on gold:
It’s worth noting that the options market looks optimistic about the yellow metal with the latest risk reversal (RR) for gold. Because the difference between call and put reflects positively on prices. However, the one-month RR reversed the previous month’s decline with the latest data of +0.430. It also targets the largest weekly data at 4 on a weekly basis.
After that, the US Initial Jobless Claims and Chicago PMI weekly data for December will be tracked for short-term directions. But great attention will be paid to risk catalysts and bond market movements during the year-end inactivity.
Gold prices technical analysis
Market analyst Anil Panchal draws the technical picture of gold as follows. A three-week ascending triangle is capping the gold price between $1,782 and $1,825. However, gold is currently retreating from the two-week upslope support line inside the indicated triangle to around $1,800.
It is worth noting that the bearish MACD signals and the heavy pressures of the RSI (14) add strength to the downtrend. However, the 200-SMA level of $1,780 is acting as an extra hurdle for gold sellers before they give them control. Alternatively, a surge of $1,825 will not hesitate to challenge June’s high around $1,880.