Gold buyers keep the faith, price closes in on $1,800

Technical Analysis

Author: Justin Low | gold

Gold inches higher today as commodities keep their early advance

Gold D1 22-02
Despite higher yields (real yields as well) and the dollar holding its ground today, gold is finding a footing after having tested the 30 November low @ $1,764.80 last week.

The key support level held and gold is keeping a modest bounce towards $1,800 again with buyers even pushing back above the 100-hour moving average today:

Gold H1 22-02
That sees near-term price action switch to being more neutral now and gold is running up against some minor resistance from the 38.2 retracement level of its recent swing move lower @ $1,796.88 - with $1,800 also a key psychological level.

As much as gold is keeping more resilient, there are still question marks surrounding gold's latest predicament when you look at the key factors at play.

For one, investors are still shedding ETF positions and that isn't a convincing sign:

And despite breakevens keeping leveling off in recent days, real yields have jumped higher from -1.02% on 12 February to -0.78% today. That is seeing the correlation catch up in the wrong way, although gold may still get help from central banks sooner or later.
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Despite the relatively better performance today, I would argue that gold needs to keep a push back above $1,800 to establish a base for further upside momentum. Otherwise, the latest bounce here may not last - especially if risk aversion kicks into second gear.

As for commodities in general, I'd still say that as the gold allure fades in recent weeks, there are better prospects out there with silver and platinum being among the other comparables and copper of course being the hot pick over the past week on supply issues.

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