Gold price outlook blocked by an unsuccessful test attempt at the highest

Gold discussion points

Gold seems to have scored a failure at its highest monthly ($ 1237) as it traps the price movement related to the range of the previous week, and the precious metal could show more bearish behavior over the next few days by initiating a series of lower lows.

Gold price outlook blocked by an unsuccessful test attempt at the highest

It seems that the recent rebound in gold will continue to erode, with the Fed still raising its key rates by 25bp in December, and rising interest rates may continue to undermine the attraction of bullion, the central bank seeming to be on the rise. track to carry the hiking cycle in 2019.

Even though the president Jerome Powell warns that the federal funds rate is "just below the wide range of level estimates that would be neutral for the economyNew comments suggest the central bank will continue to normalize monetary policy over the next few monthsInterest rates are still low by historical standards. '

The Federal Open Market Committee (FOMC) may have no choice but to further normalize monetary policy in 2019 because United States trade policy import price, and President Powell & Co. could finally propose a hawkish rate hike at the last meeting of 2018several participants reported that firms in their districts that faced higher input prices because of tariffs perceived greater production capacity.the prices of their products. "

That said, the rise in US interest rates could continue to undermine the attractiveness of gold, especially as Fed officials subscribe to a prospective falconer monetary policy stance, but sentiment around bullion remains skewed as the crowd of retailers continues to bet on rising gold prices.

the Customer Trust Report IG shows 82.3% traders are again net-long gold compared to 84.0% last week, with the long traders ratio short at 4.64 for 1.The number of net-long traders is 0.9% lower than yesterday and 4.1% compared to last week, while the number of net-short traders is 5.9% lower to that of yesterday and higher by 0.9% than last week.

The continuing retail trend is jeopardizing the rebound from the 2018 trough ($ 1,160), as it offers a counter-current view of the crowd feeling and the unsuccessful attempt to test highest monthly ($ 1237) brings down the targets on the radar while the bullion price sculpts a new series of highs and lows. Sign up and join the DailyFX analyst David Song LIVE for an opportunity to discuss potential business configurations.

Daily chart of gold

• Do not forget that gold seems to be stuck in the upward channel after being sluggish from the downtrend observed earlier this year, but the relative strength index ( RSI) offers a contrasting signal when the oscillator interrupts the upward formation postponed from August.
• Waiting for an end under the Region from $ 1210 (50% retracement) to $ 1219 (61.8% retracement) to openThe area of ​​1198 USD (38.2% increase) is just above the lowest monthly (1196 USD), with the next region of interest falling around 1172 USD (61.8% retracement) %) to 1180 USD (extension of 23.6%).

For further analysis, consult the Q4 Forecast for gold

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— Written by David Song, Currency Analyst

Follow me on Twitter @DavidJSong.