- In the US, economic data was disappointing, but in the Eurozone, activity turned out to be positive.
- Gold needs to post a healthy correction to go back up and break important resistance zones.
- In the short term, a pullback to the 1845-1876 region would indicate that the precious metal may rebound.
While global markets briefly changed their minds last week, there has not been a deterioration in general expectations.
US economic data has not been good. In particular, the deceleration of , the weakening of and the fall in prices showed that growth difficulties still persist.
In the euro zone, where there was a deterioration in the second half of 2022, the latest data surprised on the upside. The best scenario for the region would be the duration of energy stocks during the current winter. Thanks to the mild climate, everything indicates that the cold season will pass without any problems.
Although the geopolitical risks have been in the background, the warnings made by Russia for February cannot be lost sight of. While energy prices played a leading role in 2022, indications are that food prices will take center stage this year, especially from spring onwards, which could end up favoring global inflation.
The period from May to November was when the Fed aggressively raised interest rates. As of November, the situation changed, and the 8-month losses were erased in just 5 weeks, once again surpassing the $1,900 mark.
For now, it is not possible to see any obstacle for prices in the next five weeks, but, as the fear of a recession fades, the pace of advance of the precious metal may decline. The data to be released should determine the direction of gold in the coming months.
Technical outlook for gold
Gold closed last week above $1,920, but the correction of the last few days has not been as deep as expected. A healthy correction is crucial for gold to rise over the long term. If the pullback occurs, the price of the metal may have an even stronger rebound.
As long as support at $1876 holds, the breakthrough towards 1980 is the most likely target. In the short-term, a pullback to the 1845-1876 region will indicate that the precious metal could rebound.
Notice: The author does not currently hold any position in the mentioned assets.