The US Dollar has been remarkably sluggish for the past few weeks despite being within a distinct Demand zone…
Days are Numbered for Gold
2023-02-07 • Updated
Gold is one of the most popular trading assets in the world, with a several age history and an unbelievably large market capitalization of $11 trillion. There are 100 ounces of gold in 1 lot, and it is a $1.8 million order size. Therefore, if you want to control your trades in the FBS trader application or Meta Trader 4/5, you can trade as little as 0.01 lot of gold (which is only 1 ounce of the metal). This article will guide you through the possible outcomes for the current gold movement after the US reveals their economic data and clarifies the amount of future rates hikes. So get yourself comfortable, and let’s start!
What moves the gold?
Gold had dozens of fruitful movements in both 2020 and 2021. When the world thought the economy was about to recover, our shiny friend lost 19% of its capitalization in several months. But then, another coronavirus strain emerged. So it doesn’t matter whether you are a bull or a bear trader; gold movements in 2021 gave opportunities to everyone, with 13% surges and 11% plunges.
Next week we will have a couple of events that will affect the gold price. The first is the US core retail sales on February 16, 15:30 GMT+2. It shows a change in the total sales value at the retail level, excluding automobiles. High numbers mean economic strength. Thus, gold might slide lower after the release. The second is FOMC meeting minutes, where we will get more information on rate hikes and monetary tightening. The record will be available on February 16, 21:00 GMT+2. Hawkish tones from the Fed members will press on the gold. You can get the data first in FBS economic calendar; it is fast, convenient, and easy to use.
Forecast for gold
Expectations of rate hikes, inflation concerns, and coronavirus pressure the gold price. The market is about to decide the fate of the metal for 2022. As far as we know, this year, five rate hikes are expected to fight inflation both in the US and in other countries. Due to relatively slow economic recovery, money flows not to the gold but to even more defensive assets, like the Japanese Yen and Swiss Franc. We expect that if the inflation stops at current levels (7-8%), XAU/USD will struggle to rise and may slide down to 2020 levels ($1700-1600).
As for February, gold may reach the upper border of the descending trendline at $1855, and it is the perfect opportunity to wait for a reversal or a breakout of this level. (Enter the trade only after the confirmation from the chart).
XAU/USD daily chart
Resistance: 1850; 1870
Support: 1790; 1765; 1725
On the bigger timeframe, gold is moving sideways in the symmetrical triangle. Triangles are tricky price formations as they often work poorly. The best way to predict the future price movement is to wait for a breakout and then trade in the breakout direction. Apart from technical indicators, we think gold will be weak for the next several months due to rates hikes and economic recovery. We expect the metal to reach $1725 and $1685 levels in the 2-3 months. To learn more about technical analysis and get trade ideas daily, visit the FBS website; we post our daily thoughts on the market and are sure you’ll find them helpful.
XAU/USD weekly chart
Resistance: 1870; 1915
Support: 1765; 1725; 1685
You can trade XAU/USD contract for difference with FBS. It doesn’t matter whether you are buying or selling; you have the same sweet conditions for all your trading desires. And the best time to open a trade is now. Good luck!
A comparative examination of the strength of the US-Dollar often gives tangible insight into the direction of Gold (XAUUSD). The chart above indicates the expectation of a bullish price reaction from the demand zone
For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances
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Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.