Amid inflation concerns and a drop in cryptocurrency prices, the price of gold rebounded, posting the biggest rise in three months to its best level since November. The price of an ounce of gold moved towards the $1848 resistance level, the highest in more than two months. It closed the week's trading stable around the $1835 level. Helping to maintain gold's gains, increased investor sentiment amid concerns about rising interest rates and growing concerns surrounding Ukraine.
Ahead of this week's FOMC meeting, US Treasury Secretary Janet Yellen said she was confident that the Fed and the Biden administration would take the necessary steps to bring down inflation through 2022. US President Joe Biden said he supports the expected move by Fed Chair Jerome Powell to start tightening monetary policy. "Given the strength of our economy and the pace of recent price increases, it is appropriate - as Fed Chair Powell has indicated - to reset the necessary support now," Biden added.
US-Russia tensions over Ukraine have also been affected, with Washington reportedly allowing some Baltic states to send US-made weapons to Ukraine. There are countries that have obtained permission from Washington to send American weapons to Ukraine. The UK recently indicated that it too is sending defensive weapons to Ukraine. The Russians quickly rejected Macron's speech to the European Parliament about the EU reaching a "security and stability pact" with Russia, who would prefer to engage with the United States. But there is no doubt that Macron's speech did not satisfy US officials either.
The Chinese economy grew at a solid 8.1% pace in 2021, a figure that seemed to contradict headlines about the property market crash and the crackdown on big tech companies. Containers are piling up at the already backed port of Shenzhen in China as congestion in the United States and Europe has returned to Asia, delaying ships in picking up goods from the manufacturing and technology hub. Manufacturers in southern China are now making a final push to ship goods ahead of the Lunar New Year holiday that begins next week.
Elsewhere, with mid-term elections looming in November, the Biden administration is under mounting pressure to show its willingness to punish China for not sticking to a trade deal signed two years ago. Overall, the era of historically low interest rates, which magnified Canadians' wealth and made it easier for them to spend, is coming to an end. Early this week, the Bank of Canada will begin a campaign of tighter monetary policy that will test the country's debt-laden consumers and reveal whether its robust economic recovery has staying power.
According to gold technical analysis: There is no change in my technical view of the price of gold, as the general trend is still bullish, supported by stability above the psychological resistance of 1800 dollars an ounce. The recent gains have not yet moved the technical indicators to overbought levels, which allows them and the gains to extend upwards, and the move may occur towards the overbought levels if the gold price moves towards the resistance levels of 1852, 1865 and 1885 dollars.
On the other hand, there will not be a shift in the general trend of gold according to the performance on the daily chart without moving towards the $1775 support, otherwise the trend will remain bullish. The gold price will be affected today by the level of the US dollar and the extent to which investors are willing to risk or not, and the performance may remain in limited ranges until the US Federal Reserve announces an update on its monetary policy decisions this week.