Jump to content

Gold resurrection/revival under review


Recommended Posts

Gold is up over 4% in the first two weeks of 2023 after trading above $1900 for the first time since April 2022 as U.S. inflation in December rose at the slowest rate in more than a year.


BG_gold_bar_098098098.jpgSource: Bloomberg


 Tony Sycamore | Market Analyst, Australia | Publication date: Friday 13 January 2023 

The CPI breakdown and implications:

  • Headline U.S inflation in December fell -0.1% M/M for a 6.5% Y/Y rate, well below the 9.1% peak of June 2022.
  • Core inflation gained by 0.3% M/M; however, the Y/Y rate still fell from 6% to 5.7%
  • The slowdown in inflation data brings to the market more evidence that U.S. inflation has peaked
  • In response, U.S. yields and the U.S. dollar index, the DXY both fell sharply.

Why are yields and the U.S. dollar important for gold?

Gold generally holds a negative correlation with both US yields and the US dollar.

The chart below shows that when the US dollar index, the DXY (and yields) are moving lower, gold generally does well. The opposite is also true. When the US dollar index, the DXY (and yields) rallies, gold tends to struggle as viewed into the end of October last year.

Gold vs DXY chart


gold_1_130123.pngSource: TradingView

So what does this all mean for gold?

The December inflation report provides more evidence that the trend lower in inflation is becoming more entrenched. This sets the stage for the Fed to downshift the pace of rate hikes to 25bp at the February FOMC.

A combination that should continue to weigh on U.S. yields and the U.S dollar, and prove supportive of gold.

What do the charts say?

As viewed on the weekly chart below, gold is now firmly back in the middle of the $2070 - $1675 range that has been in place for almost three years.

Gold weekly chart


gold_2_130123.pngSource: TradingView

Aside from being mid-range on the longer time frames, gold is now testing a thick layer of resistance at $1896/1920, which includes the 61.8% fib retracement of the decline from 2070 to $1616 and a cluster of lows and daily highs from last year.

A sustained break above this resistance area is needed to open up a move towards the $1999 high of April last year.

Gold daily chart


gold_3_130123.pngSource: TradingView

Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • I believe DOG, as a memecoin is already quite popular and making a buzz. But as to your question, there are always new entries into the crypto space and when a reputable CEX like Bitget list it, it will substantially expose it to new communities and potential investors...    So all in all, I believe it will be good for DOG and it's future prospects! 
    • Sometimes ago, there was a CEX offering something similar but it was for new users and I even got to know about it a bit too late so I just didn't bother.   I think it's always great to see a CEX like Bitget offering this kinda promo for both new and existing users...    Thanks OP for the early heads up 👍
    • I saw Taiko on my TL yesterday but I didn't particularly pay much attention to it... But it seem they are on a good path and have forged some reputable partnerships along the way...  I have to say it's association with big guns of the industry like OKX, Kucoin etc makes it a good prospect and if you can get some of the coins early in the Bitget Pre-Market trading as you said, it will probably be a good investment in a long run! 
  • Create New...