Gold looks for Direction; Will Bulls Flow back?
Gold traders are chasing their tails as the yellow metal price is choppy but with bearish under-tones. After two previous secular rallies that saw the precious metal breach key resistance levels as central banks opted to mint more money to support the economy, savvy investors moved their funds to havens of which gold is a permanent fixture. While some quarters are optimistic of future gains, gold is moribund, suggesting that traders are not convinced of holding positions for long in a market that's already lacking direction.
The absence of traders' conviction to hold on to their longs translates to a choppy price action withmore conviction of a deeper correction from 2021 highs. Investors would subsequently likely withdraw funds from safe havens, affecting gold's prices. However, with conflicting data, especially the stance taken by central banks and US politicians, keeping interest rates low and promising even more fiscal support, gold prices, bulls believe, will resume their uptrend in coming weeks after the hangover subsides. In their view, Bidenomics will translate to a weaker USD, a positive for the bullion. However, before a rally, first, prices must contract, correcting in profit-taking before a possible move back to 2021 highs.
Impact on Gold:
Bearish. A pullback after rallying for the better part of 2020 was inevitable. With prices trending below key resistance levels, dashing technical indicators that suggest an oversold market, sellers appear to be in the driving seat.
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