28-11-2023 - Week 48 Update
Gold for ATH?
Gold for ATH? - Yes, why not? Gold has still more to go to upside than not. The week started very well with Gold doing an upside move during Asian session, apparently due to China stimulus and that took Gold to break and hold above 2002s.
According to our Weekly Preview, our expectations to start out such week was with low volume and volatility due to lack of scheduled economic events and as a matter of fact it did.
The only thing that came out of expectations was such move on Gold during Asian Session. Gold went from 2002 to 2018 very quick and through the rest of Monday and Tuesday were in a secondary stage of market structure where on Monday ranged with roughly 70 pips and Tuesday until NY was within 40 pips (orange boxes on the chart)
Today after Commodity Exchange open (08:20AM EST), Gold started a move to the upside breaking the consolidation ranges with barely no pullbacks. Went from 2012 retest into 2028s, then even with neutral CB Consumer Confidence coming below previous but above forecast at 102 (later we saw that previous was downwardly revised to 99.1) made Gold to consolidate for short period and on the 4th attempt broke above and now, as we write such post, is hovering the 2040s. As we stated also on our weekly preview, such break of 2002s could lead to Gold to potentially hit such price points.
“… a break to the upside could lead to gold heading to break October highs of 2010 and follow previous wicks at 2020s and 2040s.”
Weekly 48 Preview
This move show us clearly that such consolidations and low volume and volatility was an accumulation of orders by buyers in that the third attempt of 2018 was a clean break and retest, pausing on 2028s with Consumer Confidence data, but even that on its third attempt gave a breakout style trade into 2040s.
As markets are correlated, DXY kept is bearish move breaking the 103s. Now it has potential to revisit the 102s and 101s, before we potentially see 100s.
Of course that such moves are related with the markets also pricing in early rate cuts in 2024 and if inflation data comes softer as expected we have potential to go even higher, but remember that markets moves in waves and we have a plenty of room to pullback on Gold and Dollar. Tomorrow we have GDP data that can come optimistic and such can support it, although EoM is right on the corner together with inflation data so we need to be vigilant and just don’t jump in buys because we are in a bullish bias.
It also true, and we should highlight, that we stated for us to see Gold on such price points we would need more fundamental reasons, although what we are seeing is that such stack of fundamentals of geopolitical tensions priced in, markets pricing in early rate cuts, poor economic US data and low inflation readings is giving such bullishness on Gold and on stocks while keeping DXY bearish as Central Banks Monetary Policy is still the macro information advantage and what is driving the markets.