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At the End of the Year, Investors Actively Redirect Capital Into Gold

12/28/2022 10:45 AM

Gold quotes are trading in a confident corrective trend, holding above the key level of last year 1800.0.

The key driver of the upward dynamics in the asset is still the USD Index, which consolidated between the levels of 103.000-104.000. There are no prospects for an early change in the trend now, since already in the first quarter of 2023, analysts predict the start of a global recession, against which the interest rates of the leading central banks are likely to be adjusted upward again. The US Federal Reserve has already announced an increase in the value to 5.00%, but so far there is no certainty that the "hawkish" rate will continue for a long time. Such high values could increase the attractiveness of bank deposits and bonds, if not for inflation, which completely levels out the entire yield. Under these conditions, undoubtedly, the choice of investors will be made in favor of the metal market, which, despite the current challenges, continues to grow slowly.

This is also confirmed by data on demand for exchange-traded gold contracts from the US Commodity Futures Trading Commission (CFTC). Last week, the total number of positions amounted to 128.8 thousand against 125.6 thousand a week earlier, and if at the beginning of the month producers were skeptical about the prospects for strengthening the positions of gold, since last week, they began to work more actively with the instrument, adding 1.290 thousand contracts for purchase, and 0.296 thousand for sale.

On the daily chart of the asset, the price continues to rise, forming a local ascending corridor.

Technical indicators hold a steady buy signal, which does not weaken yet: fast EMAs on the Alligator indicator are at a sufficient distance from the signal line, and the AO oscillator histogram forms new correction bars, being in the buying zone.

Support levels: 1781.0, 1717.0. | Resistance levels: 1833.0, 1884.0.

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