Gold is finding buyers amid risk aversion and potential central bank action. Demand for safe-haven assets is driving gold higher as interest rates rise. Support at $2200 and $2150.
- The gold market initially fell slightly during trading on Wednesday, but has since shown signs of recovery again.
- At the end of the day, I think this is a market that continues to see significant buying pressure. All things being equal, gold has a lot of reasons to go up as we’ve seen a lot of upward pressure in the past, but frankly there’s more than just momentum driving this market up.
At the moment, the market appears to be running away from risk, which is due to the fact that gold is considered a safe-haven asset, given everything that’s going on in the world. It means traders are buying gold. It makes some sense that people would flock to this asset at this point. However, there is something else happening now that could push gold prices even higher.
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Interest rates continue to rise in the United States, but at the same time traders are betting on the fact that central banks will step in and cut rates between now and the end of the year. All things being equal, this is a market that continues to benefit from expectations of central banks’ monetary policy, and by extension, central banks themselves. After all, central banks have been huge buyers of gold in recent years, and given enough time, there are always buyers in any downturn.
The $2,200 level below that is an area that has historically been a resistance level, where there is a significant amount of market memory and certain pharmaceuticals being manufactured that people may be looking for support for. It’s for a reason. If we break below that, the $2,150 level will also serve as support. I think the 50-day EMA is heading towards the $2150 level and therefore that will be the “bottom” of the market. That being said, the $2075 level is the absolute bottom of the trend as far as I can see.
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