Gold Technical Analysis: Decisions by Global Central Banks

Mahmoud Abdallah

The recent decline of the US dollar allowed the price of gold to move higher and stabilize around the $1790 resistance level for 3 trading sessions in a row. According to the technical performance and on the daily chart, the price of gold may return to neutrality if it returns to the support area of ​​$1759 again.

I still prefer buying gold from every dip, and what is stopping the pace of gains is the expectation of global central banks tightening monetary policy in the face of the strong and historical rise in inflation rates as a result of the energy and supply chain crisis. 

The risks to the economy from the collapse of China's Evergrande group have now been "contained," according to a senior IMF official. “People understand that the government has the tools to contain risks in the future,” Helge Berger, head of the fund's mission in China, said on Bloomberg TV. He said risks to the economy are being contained in the real estate sector for now, but authorities should continue to monitor if they escalate.

Berger added that China's real estate sector is highly leveraged, and the authorities' efforts to get rid of debt are welcome, but they should be careful not to go too fast or too slow.

The debt crisis of China Evergrande Group further exacerbated the contraction in the country's real estate sector and affected the economic outlook. China's real estate and construction industries contracted in the third quarter for the first time since the beginning of the epidemic. Accordingly, the International Monetary Fund lowered its growth forecast for China and the Asia-Pacific region this year due to an increase in the epidemic variables led by the delta. China's forecast was cut to 8% from 8.4% to reflect the ongoing virus outbreak, tightening fiscal policy and pressures in the real estate sector.

On the other hand, according to the Federal Reserve's Beige Book, economic activity in the US has recently grown at a modest to moderate rate, despite the slowing pace of growth. The Beige Book, a collection of anecdotal evidence of economic conditions in each of the 12 federal districts, attributed the slowdown to supply chain disruptions, labor shortages, and uncertainty about the delta variant of COVID-19.

The report added that the majority of federal regions indicated positive growth in consumer spending, despite the widely reported decline in car sales due to lower inventory levels and higher prices. Big Book said manufacturing grew moderately to strong in most parts of the country, while growth in non-manufacturing activity ranged from slight to moderate in most regions.

The Fed also said that US employment has increased at a modest to moderate rate in recent weeks, as demand for workers has been high, but employment growth has waned due to a lower supply of workers. On the inflation front, the Beige Book said that most regions registered a significant rise in prices, supported by the rising demand for commodities and raw materials.

Gold

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.