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Gold Under Pressure

1/31/2023 10:43 AM

The XAU/USD pair is consolidating near 1920.00, maintaining an uncertain trend towards the development of corrective dynamics. Last week, gold managed to renew its April all-time highs near the level of 1950.00, having received support from the weakening USD Index.

Now analysts are waiting for the US Federal Reserve meeting, which could result in an increase in interest rates by 25 basis points. At the same time, despite the slowdown in the tightening of monetary policy, experts are confident that the Chair of the regulator, Jerome Powell, will maintain a fairly tough rhetoric, backing it up with evidence of still high consumer inflation in the country. After a 25 basis point increase in February, the figure will reach 4.50%, but most analysts suggest that the Fed will be able to bring it to 5.00% as early as the first half of 2023.

Pressure on the position of the instrument is also exerted by the upcoming meetings of the European Central Bank (ECB) and the Bank of England. Both regulators are expected to raise interest rates by 50 basis points and also signal in favor of further monetary tightening at a more moderate pace. During the week January data on inflation will be published in the euro area. Consumer prices are projected to remain above 9.0%, well above the 2.0% target set by the ECB. The issue of recession risks for the European and British regulators is much more acute than for the US Federal Reserve, so for them the room for maneuver is significantly limited.

An active uptrend continues in the gold contracts market. According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in gold amounted to 157.7 thousand against 153.2 thousand a week earlier. Despite the fact that the "bears" continue to hold the lead in terms of overall positions, the buyers are also actively increasing the number of deals: their balance with swap dealers amounted to 85.452 thousand against 247.408 thousand for sellers. Last week, the "bears" increased their positions by 10.465 thousand, and buyers increased them by 0.556 thousand, which indicates that the demand for the asset is not decreasing.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic also keeps a confident downward direction but is already approaching its lows, which indicates the increasing risks of the oversold instrument in the ultra-short term.

Resistance levels: 1930.00, 1952.53, 1974.22, 2000.00. | Support levels: 1915.00, 1900.00, 1886.46, 1869.49.

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