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After a Long Break, China has Resumed Buying Gold

1/11/2023 12:44 PM

The XAU/USD pair moves within a confident uptrend, holding above last year's key level of 1850.0 on the back of a correction in the USD Index, which is near last year's lows around 103.000.

Positive messages from China provide additional support for gold quotes, where the People's Bank of China enters the market for the second month to buy metal in reserves, although this has not happened for three years before. According to the report of the State Administration for Foreign Exchange (SAFE), in December 2022, the regulator purchased 30.17 tons of gold, increasing the gold reserve to 64.64M ounces from 63.67M ounces in November, and the largest volume of purchases occurred in November, amounting to 32.03 tons of gold. At the same time, the department's work trend is aimed at the active sale of US government bonds, which, with the partial lifting of coronavirus restrictions, creates a positive environment for the growth of demand for the metal.

The situation with investment demand for the metal speaks in favor of the growth of quotations: according to the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in gold increased to 141.7K from 136.9K a week earlier.

On the daily chart, the trading instrument is growing, holding above the resistance line of the ascending corridor.

Technical indicators strengthen the buy signal: fast EMAs on the Alligator indicator remain sufficiently far from the signal line, and the AO oscillator histogram forms rising bars in the buying zone.

Resistance levels: 1890.0, 1918.0. | Support levels: 1850.0, 1802.0.

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