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Gold Prices May Backtrack as Markets Steady, Omicron a Wildcard


MongiIG

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GOLD PRICE OUTLOOK:

  • Gold prices rise as risk aversion pulls down real interest rates
  • Sentiment may stead amid news-flow lull, Omicron a wildcard
  • Chart setup tilts cautiously bearish near six-month range axis

Gold prices eye NFP report after FOMC steepens yield curve, drags USD | IG  SG

Gold prices managed gains despite a stronger US Dollar on Friday as risk aversion swept financial markets. An ominously “stag flationary” configuration of responses across key asset classes saw a sharp fall in nominal rates outpacing a more modest downshift in breakeven inflation expectations. That pushed real interest rates deeper into negative territory boosting bullion’s store-of-value appeal.

Looking ahead, a quiet start to the trading week brings little by way of scheduled event risk until November’s US CPI data hits the tape on Friday. Fed officials are in a blackout period ahead of next week’s FOMC policy meeting, so no leading commentary is on the menu. This looks to have left the door open for a risk-on correction after Friday’s bloodletting. This may see gold prices retrace a bit of recently recovered ground.

News flow surrounding the still-mysterious Omicron variant of Covid-19 remains a wildcard. The baseline seems to be that this version is perhaps more virulent but less deadly than prior iterations. Headlines credibly challenging that set of assumptions – if Omicron was revealed to be more lethal than anticipated, for example – might trigger volatility across financial markets. Gold is unlikely to be immune.

GOLD TECHNICAL ANALYSIS – TILTING BEARISH NEAR 6-MONTH RANGE MIDDLE

Gold is retesting support-turned-resistance at a rising trend line set from August lows. Extension higher sees resistance capped at 1808.16, with a daily close above that putting 1834.14 in focus. Alternatively, bearish resumption faces support anchored at 1750.78. Breaching that might expose 1717.89.

Gold Prices May Backtrack as Markets Steady, Omicron a Wildcard

Gold price chart created using TradingView

GOLD TRADING RESOURCES

 

Written by Ilya Spivak, Head Strategist, APAC for DailyFX. 6th December 2021

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    • This is not an acceptable explanation for me unfortunately, I am fully aware of the need to move spreads and I had accounted for that. Especially at the open of a market, but your spread was totally unreasonable the spread on DEC contracts is already at 130pip standard, to increase it to 400pips and hold it there even after 5 mins of trading. As my execution was a 09:06 the main market volatility had already been accounted for.   So disappointing after 6years being a customer and on a profitable trade as well: 
    • Dear @MB1470, Thank you for your post. Please note that dealing spreads on shares are subject to variation, especially in volatile market conditions or other unusual circumstances.  Market spreads can widen significantly, particularly at the beginning and end of the trading day, and minimum spreads may exist. Thanks, KoketsoIG
    • This morning at the market open on NOVO DEC contracts. On Spread Bet.    the spread moved from 138pips to close to 400 pips? How can this be reasonable the candle is only displayed on a 15-2min time period not on smaller periods. At market open 09:00 ????? How is this even remotely reasonable?     
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