Gold - No decoupling from the stock market yet
On 20th September 2022, we stated that the Fed's pursuit of a tighter economy would continue to weigh on the gold price. After the rate hike, the price marked a new low simultaneously with the stock market. Then, the market rebounded, and in early October 2022, we said that we were growing increasingly anxious regarding the sustainability of the move.
In addition to that, we pointed out a high correlation between the stock market and precious metals, which still continues to threaten gold's prosperity. Because of that, we stay bearish on gold in the short term and expect it to hit 1 600 USD, as we outlined exactly a month ago. Our views are based mainly on fundamental factors, which play into cards for the U.S. dollar, weakening gold's position. However, we also consider other macroeconomic and technical factors described in our other articles.
Despite our grim short-term outlook for gold, we are very optimistic about its bright future. Indeed, we continue to wait for better prices to buy more of the physical metal while shorting paper gold. On the endnote, we voice a word of caution to investors over the upcoming FOMC meeting; we will provide more thoughts on this asset soon.
Illustration 1.01
The picture above shows the daily chart of XAUUSD. The breakout below the short-term support will bolster the bearish case in the short term.
Technical analysis - daily time frame
RSI, MACD, Stochastic, DM+ and DM- are bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Illustration 1.02 displays the daily chart of XAUUSD and simple support/resistance levels.
Technical analysis - weekly time frame
RSI, MACD, and Stochastic are all bearish. DM+ and DM- are bearish as well. Overall, the weekly time frame is bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
In addition to that, we pointed out a high correlation between the stock market and precious metals, which still continues to threaten gold's prosperity. Because of that, we stay bearish on gold in the short term and expect it to hit 1 600 USD, as we outlined exactly a month ago. Our views are based mainly on fundamental factors, which play into cards for the U.S. dollar, weakening gold's position. However, we also consider other macroeconomic and technical factors described in our other articles.
Despite our grim short-term outlook for gold, we are very optimistic about its bright future. Indeed, we continue to wait for better prices to buy more of the physical metal while shorting paper gold. On the endnote, we voice a word of caution to investors over the upcoming FOMC meeting; we will provide more thoughts on this asset soon.
Illustration 1.01
The picture above shows the daily chart of XAUUSD. The breakout below the short-term support will bolster the bearish case in the short term.
Technical analysis - daily time frame
RSI, MACD, Stochastic, DM+ and DM- are bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Illustration 1.02 displays the daily chart of XAUUSD and simple support/resistance levels.
Technical analysis - weekly time frame
RSI, MACD, and Stochastic are all bearish. DM+ and DM- are bearish as well. Overall, the weekly time frame is bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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