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Trends & Analysis
News

USD gains amid Fed rate cut speculations

News

Is the silver squeeze back?

News

Li Auto’s stock hits a speedbump on Q1 results

News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

Asset Watch

Will gold hold or fold?

Thursday, September 28, 2023

Interest rates’ unrelenting rise continues to crush risk assets as higher borrowing costs collide with bearish S&P 500 seasonality. Higher real (inflation-adjusted) yields and a stronger U.S. dollar also join the fray, while gold has become a casualty of the September swoon. As a make-or-break moment approaches, precious metals enthusiasts should closely monitor the situation.
The grey arrows on the left side of the chart below highlight how gold’s 50-week moving average largely ended the corrections during the 2019/2020 bull run. Similarly, the level acted as resistance during the August 2022 rally and became support during the February 2023 pullback.
And with the key level standing less than 1% below the Sep. 26 low, the yellow metal should soon decide if the current uptrend has legs.

Additionally, the black line at the bottom tracks gold’s weekly RSI when support materialised at the 50-week MA in 2019/2020 and February 2023, the metric remained above ~44. But when it dipped below ~44, it culminated with further weakness. Gold’s weekly RSI ended the Sep. 26 session near 46, which is another line in the sand that shouldn’t be ignored.

 

Finally, seasonality favours the bears, as October is tied for the second-worst monthly return (-0.20%), although it’s a 50/50 split between winning and losing months. Therefore, it may require another rate spike to push gold below its 50-week MA.

 

So, are you a buyer at these levels, or is more pain in store for the bullion bulls?


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