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Gold prices remain under pressure as central banks across the globe continue to implement steep interest rate hikes, placing non-yielding metals like gold under considerable pressure.
Yesterday, the ECB announced the largest interest rate hike in the central bank’s 24-year history on Thursday as the eurozone battles record inflation stoked by an energy crisis.
This demonstrates that despite poor economic growth, central banks are putting their foot on the pedal to stop inflation. It is likely to remain a headwind on the yellow metal for the foreseeable future.
Gold bulls have so far been defending critical technical support around the $1,688 level fairly well. However, if this level were to break then it could open up the floodgates to technical selling.
According to technical analysis gold bulls need to move the price above the $1,750 level to secure the prospects of the yellow metal in the short-term. In summary, the technical battle is now between $1,688 and $1,750.
Current sentiment metric towards gold show that sentiment has risen since last week, which could hint an eventual bearish breakdown in the price of gold.
The ActivTrader market sentiment tool shows that 64 percent of traders are bullish towards gold. Going forward, we really need to see a negative bias by retail to help the chances of a stronger rally. Current sentiment metrics may make it difficult for gold price to rally.
Gold short-term Technical Analysis
According to technical analysis gold remains under pressure while trading below the $1,750 level. This means that the short-term trend is bearish while the price remains capped under this level.
If bulls can anchor the price above the $1,750 level, then the next main area for bulls to test towards would be the $1,800 resistance area.
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Gold Medium-term Technical Analysis
The daily chart shows that a bullish double-bottom price pattern has formed, and that gold is attempting to rally above the critical $1,770 to $1,780 area.
Looking at the bullish reversal pattern, at a very minimum, we could see the price of gold moving the $1,840 level, or even lower around the $1,890 level in the short-term if the currently monthly high is breached.
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