September 18, 2023 (Investorideas.com Newswire) Reversals ARE essential, particularly when confirmed by excessive quantity. Thursday’s reversal in gold labored – it rallied, simply as I had warned.
The funniest factor about this rally is that it has little sense, and but it was nonetheless fairly attainable for it to occur. Why?
Curiosity Charges
They had been simply raised within the Eurozone, which shocked the market. Theoretically, globally rising rates of interest ought to trigger gold worth to say no, simply as decrease rates of interest have triggered gold worth to rally. As a substitute, gold worth moved increased.
Within the quick run, that may work, although. The reason being that what’s bullish for the euro (increased rates of interest set by the ECB are bullish for the euro) will be bearish for the USD Index, which may in flip be bullish for gold.
The above impact was sufficient for gold to reverse profoundly on Thursday, and based mostly on Thursday’s closing costs, I wrote the next:
“The markets have already got a historical past of behaving erratically when one thing surprising occurs within the Eurozone, and one should not essentially belief yesterday’s candlestick. Then again, although it would not make a lot sense essentially for gold to rally right here (charges had been hiked), the big-volume reversal may set off a several-day-long rally (…)”
The Rally is Not Over
That is what occurred. Gold worth moved to its 50-day transferring common, which may be the explanation for gold to high right here, nevertheless it would not must be. There’s a lot stronger resistance within the type of the mixture of two resistance strains. Moreover, gold rallied on fairly a powerful quantity on Friday, suggesting that the rally is just not over but.
These resistance strains cross barely above $1,960, and that is the place gold futures would possibly high (after rallying by one other $20 or so). Spot gold would even be prone to high roughly $20 increased than it closed on Friday.
Both approach, a transfer increased right here would not shock me.
Extra Data:
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