Forex Analysis & Reviews: 30.11.2022 - Will gold fall for the Fed's...

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex Loprais Team - Official participant of the Dakar rally

30.11.2022 11:35 AM

Will gold fall for the Fed's entreaties?

The external calm often hides internal tension. Despite gold's stabilization near $1,750 an ounce, we can't say the periods of turbulent XAUUSD quotes are far behind. The precious metal paused ahead of Federal Reserve Chairman Jerome Powell's speech and is trying to see if he can do what the other FOMC members failed to do. Can he use hawkish rhetoric to persuade stock indices to fall and the U.S. dollar to strengthen? Both are fundamentally important to gold.

As a rule, when evaluating the prospects for XAUUSD, the dynamics of the USD index and Treasury bond yields are analyzed. The fall of the first of them below 106, according to DeCarley Trading, will contribute to the continuation of the peak to 98, raising the quotes of the precious metal significantly higher. Many factors have already been factored into the U.S. dollar, including a 5–5.25% federal funds rate ceiling and a shallow recession that the U.S. economy will plunge into in the second and fourth quarters of 2023, according to Barclays.

Dynamics of gold and US dollar

At the same time, capital flows also affect the value of gold. Queen Anne's Gate Capital says the current rally in XAUUSD is due to an outflow of money from the crypto market. In 2020, investors actively invested in ETFs and crypto assets. As a result, specialized exchange-traded funds grew from 80 million ounces to 110 million ounces. By now, they have fallen to 95 million ounces. Many are still under water, that is, in losses. They will take advantage of the rise in gold to close their positions. If ETFs shrink another 20 million ounces, the precious metal will plummet to $1,300.

The collapse of cryptocurrency broker FTX accelerated the collapse of BTCUSD, and money poured into gold, but a stabilization of bitcoin will reverse that process.

Gold and Bitcoin Dynamics

However, if the capital outflow from specialized exchange-traded funds stops and the demand for physical assets in Asia starts to fall, the downward trend of XAUUSD can be considered broken not only technically but also fundamentally. The fact is that, in an upward trend, gold tends to flow from the East to the West and vice versa during downturns—from China and India to the USA and Europe.

In this regard, a sharp drop in October imports of China's precious metal from Hong Kong to 18.7 tons, which is 45% less than in September, indicates a decrease in demand. However, Commerzbank believes that the dynamics of the indicator was affected by restrictions imposed by Beijing due to COVID-19. According to customs data from Switzerland, gold exports to China in October decreased slightly from 44 to 43.7 tons.

In the near term, the fate of XAUUSD will be affected by Powell's speech and the U.S. labor market report for November.

In technical terms, the 1-2-3 pattern can work out on the daily chart of the precious metal. However, for this, quotes must fall below $1,725, which will be a reason for selling. A fair price break of $1,762 per ounce is more likely to be a reason to buy.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.