Gold is up more than 4% YTD

13 Jan 2023

Since our previous idea, gold bounced higher, breaking the $1 900 price tag. Currently, XAUUSD trades near $1 908, bringing it up more than 4% year to date. We continue to be highly bullish on this asset in the long term. However, we are still worried that stock and cryptocurrency markets are also rising tremendously; based on the information available, we believe this is yet another bear market rally (in stocks and cryptocurrencies), which will turn out to be unsustainable in the end, potentially weighing on gold later on. Therefore, we would like to remind the audience that gold’s moves up tend to be quick and large (percentage-wise), though this also applies to the occasion when gold’s price drops. At the moment, the price starts to deviate too far from its 20-day SMA and 50-day SMA, making a good case for the retracement toward these moving averages (sooner or later). Therefore, we voice a word of caution and will pay close attention to the volume; to further support the bullish case, we want to see further build-up in volume, accompanying price rise.

Illustration 1.01

Yesterday, gold temporarily broke above the $1900 price tag, increasing over 4% since the start of the new year.

Technical analysis
Daily = Very bullish
Weekly = Bullish

Illustration 1.02

Illustration 1.02 shows the daily chart of XAUUSD and simple support/resistance levels. To further support the bullish case for gold, we would like it to break above the resistance level at $1 919.98.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.