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Gold closed the week above its 200-day moving average last week for the first time since June this year as the yellow metal continues its epic recovery towards the $1,800 resistance zone over recent weeks.
The focus now shifts to the FOMC Meeting this week. The US Federal Reserve hiked rates by 75 basis points for a fifth consecutive meeting last month, and market players are now hoping for confirmations of a FED pivot this Wednesday.
Chair Powell also said that “The time for moderating the pace of rate increases may come as soon as the December meeting”. Markets are largely expecting a 50-basis point hike this week.
Gold could also be influenced by Chinese this week. The recent lifting of lockdown measures has helped risk-on sentiment. China has a veracious demand for gold, this could be a reason for Chinese retail to buy.
Technically, golds run above its 200-day moving average is a positive sign. It is imperative that the yellow metals continue to make traction above this key technical metric this week.
Current sentiment metric towards gold shows that sentiment has become slightly more bullish, which hints that retail are leaning towards more gains this week.
The ActivTrader market sentiment tool shows that 54 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 sustained recovery.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold could be about to test towards the head of a head and shoulders pattern on the four-hour time frame.
These type of pattern invalidations are usually very bearish. In theory, if the resets of $1,810 holds then we could see a push back towards the range high, around $1,740 level.
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Gold Medium-term Technical Analysis
The daily chart shows that the yellow-metal has moved back inside its two-year range and more importantly it is starting to make traction above its 200-day moving average for the first time in nearly 6 months.
We could see the price of gold revisit the top of its range again around $1,875. However, before that the price of gold has an important battle with its 200-day moving average, around the $1,800 level.
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