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Original title: Black Five Great Sale! Gold falls below the 200-day moving average Is gold stock showing signs of decoupling a false turn?
FX168 Financial News (North America) International spot gold fell under pressure on Friday (Nov 27), hitting a low of $ 1.774 per ounce, quickly dipping below the strong 200-day support. On the one hand, improving market risk sentiment has recently suppressed the purchase of gold as a safe haven asset. On the other hand, the weakening of liquidity during the Thanksgiving holiday also increased the likelihood of abnormal markets, which caused HuangGold priceTypical holiday fluctuations occurred in the grid. However, there is no doubt that the weaker US dollar and rising stock market appear not to have pushed gold higher, perhaps indicating that market views on gold assets are changing and signs of rising are gradually emerging. decoupling between gold and the stock market. The key factor causing this situation is that, although the demand for hedging still exists, the most influential inflation risk could be suppressed.
Recently, the Director of General Services Administration of the United States began providing federal resources for the transition of power, a move that unlocked the stalemate in the transfer of the U.S. government and eliminated the uncertainty of the transfer to some extent. of power. At the same time, news that Yellen could become the US Treasury Secretary has further bolstered America’s loose expectations. Combined with the good news about vaccines, market risk sentiment has greatly improved. The VIX panic index fell below 20 for the first time since February this year, triggering a strong sell-off in the precious metals market.
However, Yellen’s appointment as US Treasury Secretary is actually a double-edged sword for gold. The market will pay attention to how much easing policy it can bring to the US, which will directly affect the inflation outlook. Another important factor is the speed of the economic recovery: if the vaccine is successfully launched as soon as possible and the future economic recovery accelerates, the further range of easing could be limited, which will affect the inflation outlook and be detrimental to the ‘gold. Overall, the inflation risk that gold bulls are extremely dependent on is now beginning to falter and in such an environment the downward pressure on gold prices has increased rapidly.
From a technical point of view, the price of gold quickly fell below the important 200-day moving average, which is a key test for bull confidence. If it fails to get back above the 200 moving average after this week’s close, it could start triggering even bigger sales next week. The next downside target for gold is the 1764.19 level of the 50% Fibonacci retracement level of the uptrend since March of this year. If the gold price recovers lost ground at the end of today or early next week, or even returns above 1800, attention needs to be paid to the trend of false progress and the trend of the market outlook remains variable.
(Spot Gold Daily Chart, Source: FX168)
Perspective:
Independent analyst Ross Norman said: “The current concern is that central bank purchases and ETF outflows will dissipate. For now, gold is still bearish in the short term and may fall further, but in the longer term. term, given the extremely low interest rate AND the prospect of further stimulus measures in the economy, the outlook for gold cannot look better. “
Michael Hewson, chief market analyst at CMC Markets UK, said: “After the price of gold falls below $ 1,800, it is likely to drop further to $ 1,760 as the optimism surrounding the possible launch of a vaccine continues to suppress the demand for this traditional safe haven “.
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