Gold price: Different perspectives, same verdict – it’s a bull market

Gold price eased on its rally in Friday session as the Treasury yields rebounded. Hover, amid the persistently high levels of inflation and recession concerns, the precious metal is set to remain on an uptrend in the short to medium term. In fact, reaching the psychologically crucial level of $2,000 appears to be a matter of when rather than if. As at the time of writing. It was at $1,929.06; down by 0.15%.  

Inflation

Recent CPI numbers released by the US Labor Department signalled that inflation has peaked. According to the data, consumer prices rose at a slower pace of 6.5% in December 2022 compared to a similar period in the previous year.  

Interestingly, gold price has gained support from inflation in two dimensions. On the one hand, the perceived easing of inflation in the US has been weighing on the dollar. In September 2022, the dollar index rose to its highest level in about 20 years at $114.86.  

The rallying was founded on the persistently high inflation and the subsequent drive by the Fed to deal with the situation via an aggressive monetary policy. Since then, the index has dropped by over 10% to $102.00 as at the time of writing.

The recorded decline is founded on the perception that inflation has peaked and that the Fed will soon ease on its aggressive interest rates. As is the case with other dollar-priced assets, decline of the US dollar index has been boosting gold price in recent sessions.

At the same time, inflation levels remain close to the 40-year high hit in June 2022. Seeing that the precious metal is a conventional hedge against inflation, the environment will likely continue to boost gold price in the short to medium term.

What’s next for gold price

A look at gold price’s daily chart shows that the asset continues to trade above the 25 and 50-day exponential moving averages. Besides, it is set to record its fifth consecutive week of gains. It is also in the overbought territory with a relative strength index (RSI) of 72.

A look at these bullish technical indicators, coupled with the fundamentals, signal further rallying in the ensuing sessions. On the one hand, I am of the opinion that gold price will hit and exceed the psychological level of 2,000. However, I acknowledge that getting to that level may take a few days, weeks, or even months.

In the short term, 19,50 and 1,985 will be resistance levels worth watching. On the lower side, it will likely continue to find support at 1,915. Below that zone, the bulls will be keen on defending the lower support at 1,885.

gold price
gold price

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