Here are two very important notes for the gold market today…
January 27 (King World News) – Fred Hickey: Inflows into GLD ETF in 5 of 6 past days (+2 tons today). Total over period +10 tons. Still 187 tons less than last April. Long net gold futures contracts up – but also still at small fraction seen around prior tops. Western (institutional) buying could continue to propel higher…
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Gold pausing after hitting fresh cycle high
Fred Hickey: Gold traded close to unchanged on the week, but not before reaching a fresh cycle high at $1950, driven by demand from speculators and investors seeing an improved outlook. Last year’s headwinds are becoming tailwinds, as rate hikes eventually pause and yields and the dollar soften amid concerns about the economic outlook. This past week, traders have also moderated their estimates for how low inflation will eventually drop. This change is driven by the realization that some inflation measures are not that easy to kill, despite the inflationary dampening impact of the current rate hike cycle.
However, given gold’s steep ascent during the past two months which has seen it rally some $330 above the November low, the need for a period of consolidation is long overdue. Whether it is consolidation or correction will depend on the yellow metal’s ability to hold trendline and the 21-day moving average both currently around $1890.
Notwithstanding changes in the dollar and yields – both key directional drivers for algorithmic trading systems – we are watching ETF holdings, which reached an 11-week high following a modest increase this past week, the mentioned rise in US breakeven and inflation swap rates, and not least next week’s FOMC meeting to gauge further insights into the thinking at the world’s most important central bank.
Apart from this week’s high at $1950 and $1963, the 76.4% retracement of the 2022 correction, there is no major level of resistance before the psychologically important $2000 level, while support is well defined around $1900 where the 21-day moving average line meets the ascending trendline from the November low.
No Major Level Of Resistance For Gold Before The Psychologically Important $2,000 Level
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