Yr after yr, it bears repeating that January is seasonally one of the best month for gold. It’s simply a kind of issues in markets and as a rule, that development delivers because it ought to. However will it accomplish that once more this time round?
I touched on that two weeks in the past here in relation to a little bit of a technical setback in gold on the time. However since then, gold has rallied again to take a seat increased in December buying and selling, recovering from round $1,975 to round $2,050 at present. Nevertheless, the important thing resistance from the 2020 excessive at roughly $2,075 continues to carry on the each day, weekly and month-to-month charts, and that continues to be the crucial stage to look at heading into subsequent yr.
Usually, I might wish to suppose that gold can financial institution on this seasonal tailwind 9 instances out of 10. However contemplating the technical scenario above, it isn’t essentially a on condition that gold will be capable to shine in January buying and selling as soon as extra. That’s as a result of if gold is to advance additional, it has to go the check of breaking the important thing resistance stage outlined above. And meaning gold must push as much as shut at document ranges.
The rally in gold since November additionally comes on the again of a softer greenback and sliding bond yields, with the latter being a key driver particularly. That comes because the charges market steps up pricing for central financial institution fee cuts for subsequent yr.
The query for gold now’s, will merchants entrance run these expectations additional and manifest that within the type of a technical break in January? Or will such a break require validation from the charges market?
It is definitely an fascinating one and will act as one of many first few litmus assessments in gauging the market’s urge for food on the central financial institution outlook to kick begin 2024 buying and selling.
