Holding on to Our Long Gold (XAU/USD) Signal

Gold prices have been bullish since early November, as the sentiment improved on central banks slowing down with rate hikes. This came after the most hawkish year in history for central banks, which has weakened the consumer and the global economy which is heading toward a recession.

Gold reversed at the support zone around $1,616 and increased above $1,800, although buyers have had difficulty holding the price above the $1,800 level. But, the lows keep getting higher and we decided to open a buy GOLD signal during the last retreat below $1,8000, following the US final Q3 GDP report on Thursday.

The third and last GDP reading for Q3 was released on Thursday although it’s not a market mover, since it is three months late, so it’s a lagging indicator. But, this time we saw a decent reaction and price action on this report. The USD climbed higher after the Q3 GDP was revised higher from 2.9% to 3.2%.

On the daily chart above, we see that moving averages were acting as resistance at the top during the bearish trend earlier this year until November. Then the 20 SMA (gay) turned into support as buyers took control, which also shows that the pace of the bullish momentum has been quite strong. The 200 SMA (purple) acted as resistance for some time, but then it turned into support after being broken.

Gold H4 Chart – The 100 SMA Keeps Holding As Support

The retrace seems complete 

Gold reversed lower from around $1,800 and fell below the $1,800 level again, but the 100 SMA (green) held as support once again, so we decided to open a buy Gold signal above this moving average. The stochastic indicator fell to the bottom as well, which means that Gold was oversold on the H4 chart.

The US durable goods orders for November posted a decline on Friday as shown below, while the headline PCE price index showed a declining trend coming at +5.5% from +6.0% prior (revised to 6.1%). The November PCE core inflation YoY came also slowed to +4.7% vs +4.7% expected down from +5.0% in October. But, we saw a $10 jump in Gold. The price just missed our take profit target, but we are holding to this long signal as the sentiment remains bullish in Gold.

US November Durable Goods Orders

• Durable goods orders -2.1% versus -0.6% expected. Prior month was revised to +0.7% from 1.0%
• The fall in durable goods was the first after three consecutive monthly increases of 0.2%, 0.2%, and 0.7%.
• Ex transportation 0.2% vs 0.0% expected. Last month 0.1% revised from 0.5%
• Ex defense -2.6% vs. 0.4% last month (revised from 0.8%)
• Non-defense Cap ex-Air 0.2% vs 0.0% expected last month 0.3% (revised from 0.7%).

GOLD