On Thursday (December 29), international gold prices rose slightly due to the weakening of the U.S. dollar index and U.S. bond yields. In the short term, the price of gold was at $1,815. Market participants are awaiting the upcoming U.S. weekly jobless claims data for its possible impact on the Fed’s rate hike strategy.
At 14:49 Beijing time, spot gold rose 0.21% to $1,807.92 an ounce; the main COMEX gold futures contract fell 0.05% to $1,814.9 an ounce; the U.S. dollar index fell 0.12% to 104.402.
“The unemployment data will be important. If it shows an increase in jobless claims, that should weaken the dollar and support gold,” said Ajay Kedia, director of Mumbai-based Kedia Commodities.
Gold prices have been under pressure for most of this year, hit by rapid interest rate hikes by major central banks. However, gold has rallied nearly $200 from a more than two-year low hit in September on hopes that the Federal Reserve may slow the pace of rate hikes.
After raising interest rates four times in a row by 75 basis points, the Fed cut the pace of rate hikes to 50 basis points in December, while Fed Chairman Jerome Powell emphasized the need to keep interest rates high for a longer period of time to fight inflation. Higher interest rates reduce gold’s anti-inflationary appeal and increase the opportunity cost of holding the asset, since it does not pay interest.
Kedia added: “Gold has already priced in the impact of global rate hikes in 2022. Going into 2023, gold will be well supported by geopolitical tensions, recessionary woes and central bank demand. Gold ETFs (exchange-traded funds) are also starting to rise .”
Gold is trading above its 200-day moving average at $1,785. Economists at Credit Suisse expect gold prices to continue to rise to $1,876/96 an ounce, “or could rise further, but overall gold price volatility will remain choppy, keeping us neutral on the longer-term technical outlook for gold prices. With Peng Weaker Bo Commodity Index (BCOM) and stabilization of gold, relative to the broader commodity index, the price of gold has seen some gains and now has a relative bottom, we think the technical evidence suggests that the price of gold may be in the next 6-12 months Continue to outperform the Bloomberg Commodity Index.”
On the daily chart, the price of gold started an upward ((3)) wave trend from $1796, and the upper resistance looked at the 38.2% target of $1815 and the 61.8% target of $1827. The ((3)) wave is the sub-wave of the upward wave III that started from $1773, and the wave III is the sub-wave of the upward wave (III) that started from $1725.