In terms of Gold, we look at the fundamentals, sentiment, and technicals in this article and our view is that Gold could be on the verge of making a big move to the downside.
Gold longer term may well see good upside but in the shorter term, we think it will move lower on the back of a stronger USD and elevated interest rates around the world. Speculators remain heavily long Gold and short of the USD which points to more downside ahead.
Gold and Interest Rate Outlook
Gold is heavily influenced by interest rate expectations and we can see below that the gap between Gold and the US 10 Year has widened.
Gold and the USD
The market has a bearish view of the USD and speculators are heavily short which we can see on the charts below
Speculators' Heavily Long and Outflows
Speculators remain heavily long but in recent months we have seen considerable outflows.
Gold demand will be dampened while central banks around the world are near to ending their hiking cycles we expect them to remain high well into 2024. We don't favour a soft landing in the global economy and think we could well see a recession which is positive for the safe haven USD and bearish for Gold. We could also see a big breakdown in Stocks which are at a bullish extreme which could fuel more upside in the USD and more downside in Gold.
On the longer-term and shorter-term charts below, we see more downside in Gold and the key levels of support and resistance to look out for in our view are noted below.
Weekly Chart: We have failed to break above the 20 Week Moving Average and we finished down on the week and expect more downside to majro support levels at 1900.00 then 1800.00.
Daily Chart: We have moved down from the 1980.00 level and we are now below the 20-Day Moving Average which should hold rallies with first-level resistance. We expect a move down to major support levels and remain bearish unless we close above the 19600.00 level which would negate our bearish view.