GOLD NEUTRAL TECHNICAL HIGHLIGHTS
- Gold coils for the breakout
- The war between the Virus and Vaccine
TUG OF WAR BETWEEN VIRUS AND VACCINE
The week had been characterized as the tug of war between the virus and vaccine, which are currently the two highly important market narratives. The development of a vaccine is great news since it’s a sign that the end of the virus is close. The other is the reality about the rising cases of covid-19 around the US that has ultimately resulted in renewed restrictive restrictions. On the other hand, it’s like the markets have been directionless with gold slowly consolidating.
Since the vaccine was announced back on November 9, gold seems to have failed to reclaim the previous $1,900 level with gold finding it hovering at the bottom of its latest range again. Over the past few weeks, gold sentiment also seems to have softened with more funds cutting the net longs to the smallest handle since 2019 march, whereas the retail also to have shed exposure with ETF holdings dropping.
GOLD COILS FOR A BREAKOUT
If we take a closer look at the technical setup, gold seems poised to coil for the breakout. Various tests for support at 1845 have so far held steady as the rebounds become shallower. The downward breach of 1845 rises the risks for a steep move to 1800. Nevertheless, although the short term risks seem soft, with the federal reserve reiterating that the markets will most likely remain awash with more liquidity despite the latest vaccine updates, the long term forecast is still favorable as Saudi Aramco Employs Financial Institutions for a Multi-Tranche Bond Deal.
Retail and Institutional Shedding Gold Exposure