Gold price has advanced from $1630 to $1824 since the beginning of November 2022, and the current price stands at $1797.
Inflation has begun giving signals of easing in the United States, and because of this, investors hope that the Federal Reserve could hint at slowing the pace of interest rate increases at its next meetings.
It is important to note that the most significant force behind the Gold price slide during the 2022 year was the appreciation of the US dollar caused by the aggressive monetary policy from the US Central bank.
High-interest rates negatively influenced Gold’s status as a hedge against surging inflation as they translated into higher opportunity costs to hold the non-yielding asset.
If the US central bank slows the pace of interest rate increases at its next meeting in January, the US dollar will depreciate, and the price of Gold will advance above the current levels. Jim Wyckoff, a senior analyst at Kitco Metals, said:
We are going to see a better demand picture for Gold in 2023. Inflation could still be problematic, but central banks are going to, around mid-year, start to let off the gas, and that’s going to be supportive for the precious metals markets.
The scenario is improving for Gold, and investors should also consider that the global economy faces a recession risk that could dent corporate earnings and stock markets. Gold is considered a safe-haven asset, and market participants usually move towards safe-haven assets in times of recession.Technical analysis
Gold price has advanced more than 10% since the beginning of November and closed the week at $1797. The price is testing again the 10-day moving average, which is certainly a positive sign and indication that “bulls” could remain in control of the price.Data source: tradingview.com
The first resistance level stands at $1850, and if the price jumps above this resistance, it would be a firm “buy” signal. The next price target could be resistance at $1900 or even levels above.
The current support level stands at $1750, and if the price falls below this support, the next price target could be around $1700.Summary
Gold price has been advancing last several weeks, and we could see even higher prices in the weeks ahead if the Fed slows the pace of interest rate increases. If the price jumps above $1850, it would be a signal to trade Gold, and we have an open way to resistance at $1900.