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Gold: Weakness Likely to Grow in the Coming Weeks

Published 19/02/2024, 20:27
Updated 09/07/2023, 11:31

On analysis of the movements of the gold futures since the last weekly closing on Feb.16, I find a lack of enthusiasm among the bulls, as the limited trading range on Monday confirms the persistence of fear among the bulls.

Monday, gold futures traded in a tight range as the U.S. markets are closed for the Presidents' Day holiday, with trading volumes likely to be low throughout the day.

Tuesday, Survey-based purchasing managers' index data will give a sense of the health of the eurozone and UK economies in February that could provide some specific clues to the gold bugs.

Undoubtedly, the limited trading range of gold futures on Monday, between $2024.65 to $2034.30 in the daily chart on Monday as the formation of a ‘Hanging Man’ spells a slide is likely on Tuesday as the gold bugs have a close eye on the minutes from the Fed's last meeting, due on Wednesday, are likely to be the main release for investors this week.

However, the gold futures could find a wobbly move before the bears start a selling spree as any upward move by the gold futures could find stiff resistance at 9 DMA, which is at $2027.87, and the second resistance will be 18 DMA at 2037.59 in the daily chart.
Gold Futures-Daily Chart

Since I explained the formation of a ‘Bearish Crossover’ in my last analysis, gold futures retake $2000, still showing weakness as the weak U.S. retail sales data spurred some doubts over when the Federal Reserve will begin cutting interest rates.
Gold Futures-Weekly Chart

In the weekly chart, despite a reversal after hitting the significant support level last Thursday, the yellow metal is still set for seep weekly losses during this week as the traders largely scaled back expectations for early rate cuts.

However, Atlanta Fed President’s comment on lowering inflation, he was still not ready to call for a rate cut yet.

Finally, I conclude if the gold futures find a breakdown below the immediate support at $2000, the next target could be $1976 for the bears as the gold futures could find an advent of a bearish crossover by a downward move by the 9 DMA below the 18 DMA shortly.

Watch my attached video, which I uploaded on Feb. 4, 2024.

Disclaimer: The author of this analysis may or may not have any position in the Gold futures. Readers are requested to take any long or short trading position at their own risk.

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