Gold Stuck Between $1830 to $1810. What is next?
Fundamental Analysis
Gold is still holding its price above trendline support and below strong resistance at $1830/1832 price zone middle of trading today, Tuesday, January 18th, in the European session of the week, by about 0.20%, and is trading at levels of $ 1817 per ounce. Last week the USD was under pressure against all the major pairs. But at the beginning of the week, the USD is dominating again. But the gold is still holding above its immediate support of $1812, and the trendline supports the $1800 price zone.
The yellow metal is under pressure from the rise in U.S. Treasury bond yields at the end of last week, as the yield on the ten-year treasury bonds approached its peak recorded in January 2020, the highest levels of 1.84, by trading at the closing of the week at levels of 1.793, an increase of about 1.20%. Because of the U.S. 10 years, bond gold is under pressure.
In 2021, 10 years bond high rate was 1.773%, but in 2022, the bond's rate broke above the previous year's high. So if ten years treasury bond continues its uptrend, gold might have chances to drop again below the $1800 price zone. I don't find any other reason behind the dropping of the gold price and being unable to break above the strong resistance level of the $1832 price zone.
According to data released at the end of last week, inflation rose in the United States of America in December, according to data released at the end of last week, to 7%, recording the highest inflation reading in forty years.
It is also a supportive factor for the rise in gold, which is known as one of the most important tools and assets used to hedge against inflation, ignoring at the same time its extreme sensitivity against rising interest rates. The U.S., because it will increase the opportunity cost of acquiring gold.
On the other hand, cases of infection with the Coronavirus in its new strain, Omicron, continue to record levels worldwide, which constitutes support for the heights of assets and safe havens, with the yellow metal coming at the forefront.
The COT report issued by the Commodity and Futures Trading Authority, which reflects the concentrations of major investors and portfolios for the past week, showed a decline in the purchasing concentrations of gold, bringing the volume of concentrations to 199,737 thousand contracts, compared to 211.355 thousand contracts the previous week.
SO, overall it is still positive that the gold price has more room to go up. The only obstacle is us ten years treasury bond. But when inflation rises, it is also hard to raise the bond's rate. Even higher bonds are not good for the stock market as well. As investors are concerned about Coronavirus, inflation, and economic growth, that's why the ten years bond is rising, but I hope this rally in 10 years bond won't last long. Otherwise, the U.S. stock market has chances to collapse.
Technical analysis
Technically gold is holding above the trendline. Therefore, as long as the gold is above the $1800/1795 price zone, it will be considered an uptrend in the H4 chart.
$1830/1832 is identified as a resistance. Breaking above $1832 will open the door for the $1848/1850 price zone. From the present scenario, $1850 seems to trendline resistance. So, after testing the trendline resistance of the $1850 price zone, gold may go for another downside correction.
Immediate support is identified at the $1812 price zone from the present price zone. Breaking below $1812 may open the door to test the nearly $1800/1795 price zone. But as long as the gold price holds above the $1795 price zone, it will still chance to pull back to the upside. But in case gold breaks below the trendline support of the $1795 price zone, it has a long way to drop nearly $1750/1720
Gold is still holding its price above trendline support and below strong resistance at $1830/1832 price zone middle of trading today, Tuesday, January 18th, in the European session of the week, by about 0.20%, and is trading at levels of $ 1817 per ounce. Last week the USD was under pressure against all the major pairs. But at the beginning of the week, the USD is dominating again. But the gold is still holding above its immediate support of $1812, and the trendline supports the $1800 price zone.
The yellow metal is under pressure from the rise in U.S. Treasury bond yields at the end of last week, as the yield on the ten-year treasury bonds approached its peak recorded in January 2020, the highest levels of 1.84, by trading at the closing of the week at levels of 1.793, an increase of about 1.20%. Because of the U.S. 10 years, bond gold is under pressure.
In 2021, 10 years bond high rate was 1.773%, but in 2022, the bond's rate broke above the previous year's high. So if ten years treasury bond continues its uptrend, gold might have chances to drop again below the $1800 price zone. I don't find any other reason behind the dropping of the gold price and being unable to break above the strong resistance level of the $1832 price zone.
According to data released at the end of last week, inflation rose in the United States of America in December, according to data released at the end of last week, to 7%, recording the highest inflation reading in forty years.
It is also a supportive factor for the rise in gold, which is known as one of the most important tools and assets used to hedge against inflation, ignoring at the same time its extreme sensitivity against rising interest rates. The U.S., because it will increase the opportunity cost of acquiring gold.
On the other hand, cases of infection with the Coronavirus in its new strain, Omicron, continue to record levels worldwide, which constitutes support for the heights of assets and safe havens, with the yellow metal coming at the forefront.
The COT report issued by the Commodity and Futures Trading Authority, which reflects the concentrations of major investors and portfolios for the past week, showed a decline in the purchasing concentrations of gold, bringing the volume of concentrations to 199,737 thousand contracts, compared to 211.355 thousand contracts the previous week.
SO, overall it is still positive that the gold price has more room to go up. The only obstacle is us ten years treasury bond. But when inflation rises, it is also hard to raise the bond's rate. Even higher bonds are not good for the stock market as well. As investors are concerned about Coronavirus, inflation, and economic growth, that's why the ten years bond is rising, but I hope this rally in 10 years bond won't last long. Otherwise, the U.S. stock market has chances to collapse.
Technical analysis
Technically gold is holding above the trendline. Therefore, as long as the gold is above the $1800/1795 price zone, it will be considered an uptrend in the H4 chart.
$1830/1832 is identified as a resistance. Breaking above $1832 will open the door for the $1848/1850 price zone. From the present scenario, $1850 seems to trendline resistance. So, after testing the trendline resistance of the $1850 price zone, gold may go for another downside correction.
Immediate support is identified at the $1812 price zone from the present price zone. Breaking below $1812 may open the door to test the nearly $1800/1795 price zone. But as long as the gold price holds above the $1795 price zone, it will still chance to pull back to the upside. But in case gold breaks below the trendline support of the $1795 price zone, it has a long way to drop nearly $1750/1720
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