Gold posted solid gains for the week as market participants focus on the economy

Gold posted solid gains for the week as market participants focus on the economy

Gold prices closed higher for the day and for the week which led to solid gains. As of 5:50 PM, the ET gold futures contract in the current most active June contract is up $3.90, or a steady 0.21%, at $1,845.10. Given that gold futures traded as low as $1,785 this week and closed near this week’s high of $1,848.60, gold had a good week.

Gold prices came under pressure for the fourth consecutive week before this week’s trading activity which resulted in specific damage to the technical chart with gold breaking below the 200 EMA last Thursday, May 12th. It reached a low of $1,785 and traded as high as $1,825 before closing above its opening price on Monday and above Friday’s closing price of $1,813.60. On Tuesday, gold traded to higher highs and lower lows than Monday, although gold closed partially lower than the opening price. Gold traded lower on Wednesday and lower low on price action on Tuesday but that all changed on Thursday.

Thursday’s price action moved gold at the opening strongly higher at $1,816 and closing at $1,841, above the 200-day moving average of $1,837. Although gold only made slight gains today, it opened and closed above the 200 day moving average which is technically significant. If gold can sustain prices above $1,837 on a technical basis, we can conclude that gold prices are now back in a strong long-term bullish behaviour.

The recovery in gold this week was based on market sentiment, diverting their attention from the recent and future activities of the Federal Reserve regarding their hawkish monetary policy in which they raised the fed funds rate by % at this month’s Federal Open Market Committee meeting which followed the rate hike in gold this week. The quarter percent they imposed in March. Chairman Powell’s recent comments suggested they would be getting more aggressive when he said he was open to raising interest rates well above the Fed’s normalization target rate of around 2%. This was interpreted as more aggressive monetary policy in an attempt to prevent inflation from spiraling upward.

Data from the Federal Reserve prior to this week had indicated that they believed inflationary pressures had peaked and using the latest figures from last month’s CPI inflation indicator to confirm the validity of that assumption. The CPI came in at 8.3% for the month of April, below the 8.5% rate it recorded in March.

It was the Fed’s monetary tightening that led to a massive sell-off in US stocks that continued this week, dragging down the three major indices with seven consecutive weeks of lower prices.

However, gold has been selling heavily for four consecutive trading weeks based on the expectation of much higher interest rates to stave off inflation. However, this week we saw a clear and definite reversal of market sentiment as investors are now clearly focused on the fact that inflation has not peaked and is likely to continue rising and that prolonged market sentiment off risk has shifted market sentiment from higher US Treasury yields on safe-haven assets; He went

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Not giving an opinion: The opinions expressed in this article are those of the author and may not reflect the opinions of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.

2022-05-20 22:19:00

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