Gold Technical Analysis: Enduring a Bear Market in 2022

Mahmoud Abdallah

Amidst the best daily performance of the gold price in more than two months, the price of an ounce of gold moved yesterday, starting from the level of $ 1810, towards the resistance level of $ 1844 per ounce. This is the highest for the yellow metal in two months. Strong gains came, supported by the weakness of the US dollar and the decline in Treasury bond yields. Gold prices enjoyed a good start until 2022, although many market experts indicate that the yellow metal will endure a bear market this year amid the normalization of monetary policy.

The price of the yellow metal is up more than 2% this week, taking its year-to-date gains to 0.6%.

As for the price of silver, the sister commodity to gold, it is also rising and gained 3.14%, to $24.23 an ounce. The white metal strengthened in the first trading weeks of the year, jumping nearly 4% since the beginning of 2022 to date. Precious metals are trying to challenge the market consensus and launch a bullish wave because it will launch in four sessions. Indeed, the stagnation in the US currency and bonds has supported gold.

However, the US Dollar Index (DXY) fell to 95.53, from an opening at 95.77. So far this year, the index is down 0.45%. A weaker price is bullish for dollar-denominated commodities because it makes them cheaper for foreign investors to buy. Another factor affecting the gold market was the US Treasury market, with the benchmark 10-year yield dropping 0.043% to 1.825%. One-year bond yields fell to 0.539%, while 30-year yields fell to 2.143%. Lower returns are generally beneficial for gold because it reduces the opportunity cost of holding non-return bullion.

Meanwhile, all eyes will turn to next week's Federal Open Market Committee (FOMC) meeting, where the Federal Reserve can provide more guidance on how officials move on interest rates and the balance sheet.

In other metals markets, copper futures rose to $4.467 a pound. Platinum futures jumped to $1028.90 an ounce. Palladium futures rose to 2007 dollars an ounce.

According to the technical analysis of gold: Returning to what we mentioned in the technical analyzes of the future of the gold market, the price is moving towards what we expected exactly. We mentioned with the stability of the gold price above the psychological resistance of 1800 dollars an ounce, the bulls may move amid technical buying deals towards the next ascending levels of 1818, 1827 and 1845 dollars.  Attention is now heading to the next psychological top of 1900 dollars per ounce, and this will depend on breaking the levels of 1862 and 1880 dollars, respectively.

On the downside, the general trend of gold will not turn to the downside without moving towards the support level of $1,775 an ounce. The gold price will be affected today by the level of the US dollar and the extent to which investors take risks or not, as well as the reaction from the announcement of US data, the number of weekly jobless claims and the reading of the Philadelphia Industrial Index.

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.

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