Gold is rising with the help of the main post-covid support, 1675, and the rising tensions after Pelosi’s Taiwan visit. 1785-1805 zone was this year’s main support until it broke last month. But now, XAUUSD is retesting it from below. The main direction is still pointing towards the south with lower lows and lower highs.
There are many fundamental reasons for that gold to fall. According to models derived from real bond yields should be around 1400. ETFs’ gold holdings decreased fast for a month. And now a shorter-term signal came from risk reversals. 1 week 25 delta risk reversals turned negative again, and 1 week to 1-month reversal started to peak for the short term. Last week’s jobs data did not help either with more than double the market expectations, total jobs returned to pre-pandemic levels.
On the other side, the Ukraine war is still ongoing, and US-China relations tenser with the possibility (low) of a Taiwan invasion. On top of that, despite the recent jobs report, recession risks are higher than ever.
As seen, gold has a lot of movers pointing in different directions with being an inflation hedge, a risk-off asset, etc.
This is a good reason to follow the trend and volume down the noise for a little. The short-term trend is still ongoing. If gold can pass the 1785-1805 resistance zone, the uptrend might continue to near the previous top which there will be a test of the longer-term downtrend. But if gold could not hold the current uptrend, a sharp sell-off will be a possibility.
