President Powell’s speech on Wednesday, November 30 caused extreme volatility resulting in a dynamic price spike that took gold futures to an intraday high of $1,817 on Thursday, December 1. On Friday, December 2, gold futures traded at the same intraday high but closed lower on the day at around $1809.
Market participants immediately reacted to Powell’s speech, emphasizing that the Federal Reserve planned to slow the pace of interest rate hikes. However, today they appeared to ignore Powell’s remarks about how the Federal Reserve would slow the pace of rate hikes. They shifted their focus to the Federal Reserve maintaining an extremely hawkish stance with more rate hikes at a slower pace. In other words, market participants have focused on how long it will take the Federal Reserve to bring inflation back to its target rate rather than whether the Fed intends to slow the magnitude. individual rate hikes.
Gold futures opened today at $1810.50 and traded to a high of $1822.90 before sellers, combined with dollar strength, drove prices down dramatically . The technical sell-off sent gold prices lower as traders recognized today’s high as a double top that occurs from the high created in the first week of August at 1825 $ and today’s intraday high of $1823.
Important Technical Levels in Gold Futures
Our technical studies indicate that the resistance zone we identified last week at $1825 has proven to be resistance at least in the short term. This created a double top. This resulted in a breach of the former support level between $1790 and $1802. Our new support levels are based on a Fibonacci retracement of the rally that started Nov. 3 at $1619 per ounce to today’s high of $1822.90. Minor support first occurs at $1775, which is the 23.6% Fibonacci retracement. Major support occurs between $1720 the 50% retracement and $1745 the 38.2% Fibonacci retracement level.
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