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December 17, 2021

Gold Breaks Above $1800, What Now?

Frank Cabibi

12/17/2021

The tapering process has finally been started as Fed chairman, Jerome Powell testified that they will speed up the process where by March, purchases will be reduced to $0. This has caused a sell off in the equities market but has inversely affected the price of gold.

Our outlook

The bulls are likely focused on inflation being as high as it is along with the quicker tapering process. As jobs numbers near full employment, economic slowdown seems unlikely. So, the only way gold can find more demand would have to be from those two factors mentioned above. Judging by this year's performance, it seems that gold will probably not be able to catch enough momentum from this news alone and may come down to support on the two key moving averages.

Trade Setups

XAUUSD

Price came up to test $1814 after crossing above the $1800 level on the 1D chart. This bullish move above the 50 and 200 DMAs could be promising for the precious metal, however, gold will have to close above these moving averages to increase the probability of a continuation to the upside. So far this year, gold has had very short-lived rallies, so it's important to look for indicators that will act as more long term catalysts.

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