Commodities Analysis & Opinion

Gold Likely to See New Highs Soon

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  • Data from the US was disappointing while data from the Eurozone was positive
  • Gold needs a healthy correction to rebound and break above crucial resistance zones
  • In the near term, a pullback to the 1,845-1,876 zone will indicate that the precious metal might rebound

While global markets had a momentary change of heart last week, there was no deterioration in general expectations.

Economic data from the US was not good. In particular, the slowdown in industrial production, the weakening on the manufacturing side, and the decline in spending showed that growth difficulties persist.

In the Eurozone economy, which deteriorated in the second half of 2022, the latest data surprised to the upside. The best-case scenario for the Eurozone is that current energy stocks will last this winter. Thanks to the kind weather, this winter could pass without any problems.

Although geopolitical risks have taken a back seat, Russia’s warnings about February are important. It is also thought that while energy prices will be at the forefront in 2022, food prices due to drought may be the first issue in 2023. This situation is expected to come to the fore in spring. This may be a tailwind for global inflation.

The May-November period was when the Fed was aggressive in hiking interest rates. As of November, the situation changed, and gold erased its 8-month losses in 5 weeks and rose above $1,900 again.

For now, there is nothing to disrupt the 5-week pricing, but as recession concerns diminish, the pace of gold’s rally may slow. Upcoming data will determine gold’s direction in the coming months.

Gold – Technical Outlook

Gold closed the week above $1,920. But, the correction in the previous days was not as much as I expected. A healthy correction is crucial to gold’s rise in the long term. If a correction comes, the price may rebound even stronger.

XAU/USD 4h Chart

In case of a pullback, as long as the support at $1,876 holds, the progress toward 1,980 may continue. In the near term, a pullback to the 1,845-1,876 zone will indicate that the precious metal might rebound and challenge crucial resistance areas.

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