Gold breaches strongly .. the largest gains in 30 months .. what is next? by Investing.com


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It achieves the largest weekly gain in 30 months with the collapse of the cryptocurrency

By Barani Krishnan

Investing.com – Gold is posting its biggest weekly gain in 30 months after the two biggest rivals – the dollar and cryptocurrencies – fell this week.

Benchmark US gold futures for December ended Friday trading up $15.70, or nearly 1%, to $1,769.40 an ounce on the Comex Exchange in New York. More importantly, it rose $92.80, or 5.5% over the course of the week – its biggest rise since it jumped 6.5% during the week ending April 3, 2020.

The bullion spot, which some traders follow closely, had reached $1,766.59 an ounce by 14:45 ET (19:45 GMT) in New York.

Gold has rallied since Thursday as US inflation hit its slowest annual reading in nine months, fueling speculation that the Federal Reserve will roll back the big interest rate increases it has implemented since March, sending the dollar crashing.

The dollar index, which measures the US currency against the yen, the Canadian dollar and the Swedish Swedish krona, fell 4.1% over the course of the week, the biggest weekly drop since it fell 4.8% in March 2020.

Meanwhile, it is in crisis of its own after the crypto industry leader tumbled more than 20% for the week as cryptocurrency platform FTX headed for bankruptcy.

Gold may gain at least some of the money out of crypto this week, said Philip Strebel, chief market strategist at Blueline Future in Chicago.

“There is no firm data to confirm the money flows from crypto to gold right now, but I would be surprised if it doesn’t,” Strebel said. “Usually, it is different as gold rarely finds love from the crypto audience. But gold now appears to be relatively safer than cryptocurrencies, and the belief that it has gained new respect could mean higher inflows may have been dedicated to cryptocurrencies,” he added.

Craig Erlam, an analyst at online trading platform Wanda, joins a large group of analysts around the world who expect gold to reach at least $1,800 after breaking the resistance between $1,770 and $1,780.

“Gold bulls have been waiting this week for a long time: a week (or so) in which the Fed signaled a possible slowdown in rate hikes after CPI data showed a large and broad drop,” Erlam said.

The Consumer Price Index, or CPI, in October posted its slowest annual growth in nine months, rising just 7.7% in a 12-month period, versus the 8% growth economists had expected, and against the previous 8.2% annual growth through September. .

“There has been an explosion in gold buying volumes in the past 24 hours and it looks like we are now approaching the 50-week exponential moving average of $1,771,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com, noting that Comex gold contracts For the month of December, resistance has already been breached as it reached Friday’s session high at $1,770.95.

Reaching above the 50-week moving average of $1,771, the next leg for gold is at $1,796-1,805, Dixit said.

But he also warned that the yellow metal could still lose its bullish momentum and turn lower suddenly – as it has in the past.

“Overbought conditions on the daily stochastic may cause profit taking in the key resistance area at $1,796-1,805, leading to a correction taking the price to the support areas at $1,730 – 1,710 – 1,693 – 1,680.”

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