This week, gold prices maintained a high consolidation posture and failed to maintain above $2000. They fell nearly $10 this week. Some analysts pointed out that gold prices lack the motivation to break through $2000 next week, but they do not recommend short selling.
The failure of gold prices to convincingly break through $2000 has sparked some cautious sentiment in the market, with some analysts suggesting that gold may need to consolidate in the short term before reaching historic highs.
Although analysts do not intend to short gold in the current environment, some say that the trend of gold prices is disappointing as gold has not benefited from a significant decline in yields and a weakening US dollar.
At present, gold prices have closed at 1992 US dollars, ending three consecutive weeks of upward trend. This week's close is basically the same as last Friday. However, compared to the opening gap at the beginning of this week, prices have fallen by nearly 1%.
Commodity analysts say that gold prices continue to be driven by global geopolitical factors, as the retreat of market panic weakens gold's safe haven appeal. Although the war between Israel and Hamas continues, the conflict is still limited to the Gaza Strip, bringing the ongoing chaos in the Middle East under control.
The geopolitical crisis driving up gold prices is running out, "said Christopher Vecchio.
Vecchio stated that although geopolitical events can provide tradable momentum for the gold market, they do not help attract long-term investors. He pointed out that the rise of gold based on specific geopolitics needs to see events escalating to maintain its safe haven buying.
Vecchio stated that he withdrew from his gold position last week and will continue to wait and see in the near future as he expects gold prices to consolidate.
Most of the significant volatility in gold has ended. But I don't want to short gold because the basic background of a weaker US dollar and a decline in bond yields is favorable for gold, "he said." I think gold prices can continue to rise, but for potential traders, this will be a frustrating battle
David Morrison, senior market analyst at Trade Nation, said that the gold market is looking for new catalysts.
Ole Hansen, head of commodity strategy at Shengbao Bank, stated that he has a neutral attitude towards gold. He also pointed out that consolidation around the current level will be healthy. Prior to this, gold prices rose nearly 7% in October, which was the best monthly performance since March this year.
After a surge of nearly $200 last month, gold's rally has temporarily stopped, with profit taking once again above $2000 per ounce. With such a strong rebound in the short term, the market needs to consolidate, but so far, the adjustment has been relatively small, with support at $1953, higher than $1933, which is the 38.2% retracement of the 200 day moving average and the aforementioned rebound
On the downside, Hansen stated that gold prices must fall back to $1900 per ounce in order to put this new upward trend at risk.
Next week, focus on Powell
Due to the limited economic data to be released next week, analysts say investors will continue to digest the Federal Reserve's monetary policy decisions.
Although the Federal Reserve has maintained interest rates unchanged for the second consecutive time in this tightening cycle, Federal Reserve Chairman Powell still maintains his tightening tendency.
Is the restrictive nature of monetary policy sufficient to reduce inflation to 2%? That's the question we ask ourselves, "Powell said at a press conference after the monetary policy decision.
Barbara Lambrecht, commodities analyst at Commerzbank in Germany, said: "The Federal Reserve has opened the door to another rate hike. Although we believe interest rates have peaked, market participants may still remain cautious in this regard. Assuming the situation in the Middle East does not further escalate, the upward potential of gold prices may be severely limited
Powell will participate in a panel discussion on "Currency Challenges in the Global Economy" in Washington, D.C., where the market will have the opportunity to hear more of his speeches.
The only important economic report to be released next week will be the initial consumer confidence survey by the University of Michigan.
Last month's revision of the survey results surprised the market, with one-year consumer inflation expectations rising by 4.2%. Powell refuted this data at a press conference, stating that it is an outlier, and most consumer surveys show that inflation expectations are still "stable".
Next week's data:
Monday: Federal Reserve of Australia Monetary Policy Decision
Thursday: Weekly jobless claims in the United States; Powell participates in group discussions
Friday: University of Michigan Preliminary Consumer Confidence Index
