Gold: A deeper pullback looks likely below $1920 – UOB
|Markets Strategist at UOB Group Quek Ser Leang gives his views on the prospects for the yellow metal.
Key Quotes
After spot gold soared to a high of $2,072… we noted that ‘The advance to $2,072 lacks momentum as can be seen in the daily MACD which is barely positive’. However, we highlighted that spot gold ‘has the potential to rise further towards the top of the rising wedge near $2,100 before the risk of a reversal increases’. We added, ‘If spot gold falls below $2,020, it will most likely test $1,963’.
Spot gold not only broke below $2,020 in the middle of last month but also $1,963. On Tuesday (30 May 2023), it fell further to a low of $1,932. The low appears to have slightly breached both the 21-week exponential moving average and the rising trendline connecting the lows of October last year and March this year. The price actions, combined with the weekly MACD turning negative (as of last week) suggest an increasing risk of a bearish reversal.
However, spot gold has to break the support at the bottom of the daily Ichimoku, now at $1,920, before it could weaken towards $1,870 (the current level of the 55-week exponential moving average). The risk of spot gold breaking clearly below $1,920 will remain intact in the next month or so as long as it does not move above the top of the daily Ichimoku cloud, currently at $1,992.
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