Gold GOLD PRO WEEKLY, December 27 - 31, 2021

Sive Morten

Special Consultant to the FPA
Messages
15,946
Fundamentals
The specific of current period stands with not common investors' reaction on changing of the Fed policy. In general it looks hawkish enough which is not very good for the gold market. Fast rising of the interest rates usually depresses gold as it loses its attractiveness comparing to interest-bearish assets. But these days, market reaction was a bit curious, as we've discussed last time, suggesting that markets have doubts that Fed will fulfill everything that it intends to. Mostly doubts rely to fragile economy conditions and too high inflation, suggesting that any, even minor tightening could hurt slow recovery which makes Fed to soften the policy. This explains no interest rates growth in response to Fed announcement and fast gold action last week.
As we've said yesterday, another hot topic that is coming on first stage is Omicron. Once it has appeared, it was an attempt to ignore or play this news out fast. But, based on recent events, it seems that this reaction breaks the plans of those who have launched it. Since any new variant is potential slow down of economy and longer term of recovery - this is supportive topic for the Gold market. And this lets us to keep short term bullish view. Longer-term expectations indeed depend of how consistent Fed will be to its promises.

Market overview

Gold prices edged higher on Monday, hovering near a three-week high hit in the previous session, as fears over the rapidly spreading Omicron coronavirus variant boosted the metal's safe-haven appeal. Physical gold demand in India showed a modest improvement this week as some buyers rushed to stores anticipating a further rise in domestic prices, while customers in other Asian hubs started bullion shopping for Christmas.

"There are a lot of reasons to own gold since real rates remain historically low even if the Fed raises interest rates. The bond market remains non-reactive in terms of terminal rates," said Stephen Innes, managing partner at SPI Asset Management. Omicron uncertainty could lead to a more dovish central bank narrative in 2022, Innes said, adding that issues in Washington over the domestic investment bill and the Ukraine risk were also boosting the metal's appeal.

Benchmark 10-year U.S. Treasury yields dropped, lowering the opportunity cost of holding gold. U.S. Federal Reserve officials discussed raising rates as soon as March and starting to run down the central bank's balance sheet in mid-2022. However, the remarks barely changed the bond market's view that short-term interest rates could top out below the Fed's estimated peak

"Some inflation concerns have subsided since the Fed has taken action to rein it in, yet at the same time economic activity is likely to be impacted due to COVID-19 restrictions. This could weigh on the treasury markets," said Harshal Barot, a senior research consultant for South Asia at Metals Focus. Major economic events are behind us now, so until the end of the year and probably until early January, gold is likely to be range-bound."

U.S. Senator Joe Manchin, a moderate Democrat who is key to President Joe Biden's hopes of passing a $1.75 trillion domestic investment bill, said on Sunday he would not support the package, drawing a sharp rebuke from the White House. Manchin appeared to deal a fatal blow to Biden's signature domestic policy bill, known as Build Back Better, which aims to expand the social safety net and tackle climate change.



"I cannot vote to continue with this piece of legislation," Manchin said in an interview with the "Fox News Sunday" program, citing concerns about inflation. "I just can't. I have tried everything humanly possible. My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face," Manchin said.

He then released a statement accusing his party of pushing for an increase in the debt load that would "drastically hinder" the ability of the country to respond to the coronavirus pandemic and geopolitical threats. The White House responded angrily, accusing him of breaking his promise to find common ground and get the bill passed.

The White House had hoped to keep negotiations cordial and private to avoid alienating Manchin, who represents West Virginia, a state that Biden lost to former President Donald Trump by almost 40 percentage points in the 2020 election. But many top Biden allies believe Manchin is damaging the Democratic president's political future.

European stocks retreated amid a global sell-off in equities, with investors fretting over the spectre of tighter COVID-19 curbs hitting the global economy as cases of the Omicron variant surge.

Negative risk appetite on Omicron worries, and U.S. Treasury yields being low - which reduce the opportunity cost of holding bullion - are supportive for gold prices, said Michael Hewson, chief market analyst at CMC Markets UK.

European Central Bank policymakers meeting last week sought a greater acknowledgement of inflation risks but were rebuffed by the bank's chief economist Philip Lane in an unusually robust debate. Central banks around the globe including the U.S. Federal Reserve have acknowledged that inflation may be more stubborn and persistent than once thought, but the ECB has stuck with its narrative that price growth will slip back below the target level on its own in late 2022.



In what was described as a robust and tense meeting, a significant number of policymakers questioned the quality of the ECB's projections, pointing to their checkered track record, and argued that inflation was at risk of ending next year higher than the ECB's expectation.

"Quite a few wanted to acknowledge the upside risks but Philip (Lane) pushed back hard," one of the sources said. "After a lengthy debate we appeared to agree on a 'small upside risks', but even that was nowhere to be found in the statement."



The closest ECB President Christine Lagarde came to such an acknowledgement was when she said "there is possibly an upside risk" in response to a reporter's question.

"The statement didn't quite give back the flavour of our debate," a second source said.



Even as Lagarde sought consensus, four policymakers opposed the ECB's package of measures that dialled back but extended stimulus. Germany's Jens Weidmann, Luxembourg's Gaston Reinesch and Austria's Robert Holzmann voted against the measures while Belgium's Pierre Wunsch, who did not have voting rights, also expressed his opposition.

The sources said that several people questioned the quality of the ECB's forecasts, which have been subject to large revisions for years, and that staff models appear little equipped to calculate with the pandemic's once-in-a-lifetime shock. Indeed, the bank's 2022 inflation projection was nearly doubled to 3.2% last week, but projections further out were raised only modestly with price growth seen below target in both 2023 and 2024.

"It was not the friendliest discussion," another source said. "It was quite heated at times and dissenters came under personal pressure to join the majority."

Policymakers appeared especially bothered by the inherent tendency of the models to revert to the long-running average as the economy is likely to undergo a fundamental change in the post-pandemic years. Since Thursday's policy meeting, the central bank governors of Germany, Portugal and Lithuania all warned in public that inflation was at risk of exceeding the ECB's projection.

Policymakers who voted against the package were also unhappy with the length of the ECB's commitment, including its pledge to reinvest cash from maturing bonds through 2024.

"Gold had a nice little bit of a rally and now we're entering that holiday period where there's no longer full participation from traders and you're probably going to see reduced appetite for risk doing little to help gold," said Ed Moya, senior market analyst at brokerage OANDA. The choppiness was likely to persist into year-end before an eventual consolidation above the key $1,800 level in the next month or so, amid Omicron headlines, Moya added.

"We could still see modest upside for precious metals as the bearish tilted positioning slate suggests the yellow metal may be more responsive to any doubts that begin to arise surrounding the Fed's ability to deliver on their hawkish stance," TD Securities said in a note.

British Prime Minister Boris Johnson said on Monday he would tighten coronavirus curbs to slow the spread of the Omicron variant if needed, after the Netherlands began a fourth lockdown and as other European nations consider Christmas restrictions.

Commodities outperformed other assets this year as a recovery from the pandemic boosted demand though gold's poor showing dented investor appetite. Heading into 2022, commodities, which often perform well late in economic cycles, are due to remain competitive with equities as global growth extends its upward trek, analysts said.



"We like both equities and commodities and we have an overweight view for both in 2022. It's hard to say which one will do better," said Koen Straetmans, senior multi-asset strategist with NN Investment Partners in the Netherlands, which had 298 billion euros ($336 billion) under management at end September.

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In commodities, coffee has been a standout, rocketing 84%. Benchmark U.S. crude oil has surged 40%, copper has added 21% while gold has fallen, sliding 5%, partly due to expectations of interest rate rises.

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Gold is a top focus among general investors and its erosion after gaining 25% in 2020 has hit flows into investment vehicles. U.S. exchange traded funds (ETFs) in commodities have seen net outflows of $5.5 billion this year after inflows of $41 billion in 2020, Morgan Stanley data showed.

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In 2022, top commodity consumer China is due to see weaker growth, but the government is likely to balance a crisis in the property sector with moderate stimulus, analysts said.
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Next year, as logistics disruptions ease, global commodity demand should be robust as industry catches up with restocking, but this may be offset by more plentiful supply of many raw materials.

"There will also be a number of macro headwinds, which should limit further upside for the commodities complex," ING analysts said in a note.

"While the (recent) announcement of the U.S. Federal Reserve's tapering was slightly negative for gold, it has seen some support due to worries over the Omicron variant," said Ajay Kedia, director at Kedia Commodities in Mumbai. While gold could see support in 2022 due to Omicron risks, gains would not be in the double-digits and be in the range of 7% to 8%, added Kedia.

However, "gold investors lack the stomach for any sort of losses still, as evident by recent rapid retreats on rallies above $1,800," said Jeffrey Halley, senior market analyst at OANDA, adding it lacked the momentum to break out of current range-bound trading.

While a lower U.S. dollar has helped gold, "markets are still reluctant to send spot prices significantly higher, knowing that Treasury yields could yet surge with U.S. Federal Reserve rate hikes looming next year," said Han Tan, chief market analyst at Exinity. However, the precious metal could catch fresh bids in 2022 if inflation expectations stay stubbornly elevated while nominal yields remain suppressed."

"You got a risk on trade with U.S. equities bouncing back after the losses yesterday," and the dollar is also recovering along with U.S. Treasury yields, all pressuring gold a bit, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. But "people are buying any kind of dip they can" as they are worried about uncertainties including the economic hit from COVID-19 and the $1,800 level remains a key pivot point for gold, Streible added.

Gold prices were stuck in a narrow trading range on Wednesday as investors headed into year-end holidays, with a steady improvement in risk appetite countering safe-haven demand fuelled by the rapidly spreading Omicron COVID-19 variant. Although Omicron concerns abound, the lack of overtly distressing symptoms provides some relief, which is a reason for a move towards riskier assets, said Stephen Innes, managing partner at SPI Asset Management.



U.S. Treasury yields were steady near one-week highs, weighing on gold as higher yields increase the opportunity cost of holding bullion, which pays no interest.

Spot gold may retest a support at $1,785 per ounce, with a good chance of breaking below this level and falling towards $1,773-$1,778 range, technical analysis showed.

"You have conflicting signals," said Quantitative Commodity Research analyst Peter Fertig, noting that for gold, pressure from firm government bond yields was being neutralised by support from weakness in UK equities after downbeat GDP data.

Official data on Wednesday showed Britain's economy expanded more slowly than previously thought in the July-September period, nudging UK shares lower.

Investors took stock of data showing U.S. economic growth slowed sharply in the third quarter amid a flare-up in COVID-19 infections, although activity has since picked up, putting the economy on track to record its best performance this year since 1984

Container shipping giant Maersk on Wednesday agreed to buy Hong Kong-based LF Logistics for $3.6 billion in an all-cash deal that will add hundreds of warehouses in Asia and help it expand beyond its core ocean freight business. The deal is one of the group's largest takeovers to date and follows a series of acquisitions including logistics and e-commerce firms, a freight forwarder specialised in air freight and its smaller rival Hamburg Sud.

"Today we mainly help our customers import from Asia, but with this acquisition we make a big bet on long-term growth in Asia and on offering our customers better access to the Asian consumer," Maersk Chief Executive Soren Skou said on a conference call.

Record high container freight rates stemming from the impact of the pandemic have boosted big shipping companies and prompted deal-making by Maersk and its rivals, including CMA CGM and Mediterranean Shipping Company (MSC). With chaotic conditions in the global supply chain, big companies have been willing to pay a premium for more reliable and integrated freight solutions.

With a network of 223 warehouses, including 49 in China, and around 10,000 employees in 14 Asian countries, LF Logistics provides land-based services such as warehousing and trucking to more than 250 global customers. With the deal, Maersk will own 549 warehouses globally and increase total warehouse floor capacity by 40%, creating the world's seventh largest contract logistics company behind the likes of UPS, DHL and Kuehne+Nagel.

Ocean freight costs are likely to remain high in 2022 as investors and regulators scramble to accelerate decarbonization of the shipping industry and companies grapple with green financing, sources say. Shipping, which transports about 90% of world trade and accounts for nearly 3% of the world's CO2 emissions, is under growing pressure from environmentalists to deliver more concrete action including a carbon levy.

Last month countries including the United States at the COP 26 climate summit pushed for the IMO to adopt a zero emissions target by 2050. So far, its goal is to reduce overall GHG emissions from ships by 50% from 2008 levels by 2050.

Underscoring the challenges ahead will be the impact on poorer countries such as Pakistan. While the country was a small carbon emitter, climate change had "directly impacted us hard", Pakistan's Federal Minister of Maritime Affairs Ali Haider Zaidi said. Developing countries cannot afford to spend on the type of infrastructure needed and therefore, developed countries must support the process at the IMO," he told Reuters referring to the R&D fund.

Financing the path ahead is another hurdle. Shipping will need $2.4 trillion to achieve net-zero emissions by 2050, with around $500 billion required by 2030, according analyst estimates.

"Certainly, the European banks at least and not far behind the American banks will have to meet criteria that satisfy sustainable finance," said Tony Foster, chief executive of specialist asset manager Marine Capital. When it comes to new assets it is going to be increasingly difficult to fund anything that does not quite qualify and the same will be true, perhaps even more so, with existing assets. Capital is afraid - how do you invest in a 25-year asset when you have no idea what the IMO is going to do in five years," Maupin said. The industry has a far reduced ability to build ships and limited capital available to do so. Simple supply-demand suggests rates are going to be higher and the industry is going to have to generate more capital to fund itself.

Gold prices edged up on Thursday in thin year-end trading, as the safe-haven dollar weakened following encouraging studies on the Omicron COVID-19 variant and rising optimism about the global economic outlook.

Thin trading and Christmas buying are keeping gold above the $1,800 level, said Michael Langford, director at corporate advisory AirGuide. He added that the rise of risk-on investments ahead of Christmas, called a "Santa Claus rally", was creating a bit of a short-term positive for the metal.

"Gold faces technical resistance at $1,815 and $1,826, with geopolitical risks ahead potentially keeping gold supported despite the tapering narrative," said Nicholas Frappell, a global general manager at ABC Bullion.

Tensions between the United States and Russia have heightened, with U.S. officials this week considering export control measures to disrupt Russia's economy should Russia invade Ukraine

"The main driver for gold moving again above the $1,800/ounce mark are rising U.S. inflation expectations as gauged by the breakeven," said UBS analyst Giovanni Staunovo.

Gold-backed ETFs (gold ETFs) experienced net inflows of 13.6 tonnes (t) (US$838mn, 0.4% AUM) in November, the first month of positive flows since July. Inflows into North America and Europe well exceeded outflows from Asia, which saw negative flows for the first time since May. Global gold ETF holdings rebounded from year-to-date lows, increasing to 3,578t (US$208bn) as investment demand for larger gold ETFs returned amid decades-high inflation and heightened market volatility.
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Conclusion:
So, as we've said recent events with Omicron presentation in mass media and "rules" how market society has to treat it makes us think that gold gets the support in short-term. Markets should keep holding under the pressure of new limitations curb, lockdowns and other stuff of this kind. Any news that promise economical weakness are supportive to the gold as they reduce inflation expectations and decrease necessity of aggressive Fed steps. So, Omicron for some time should provide tonic effect on the gold market.

By taking a look in longer perspective, we're not occasionally bring here Maersk deal and Eco plans on global shipping sector. The pandemic, "green" plans and consolidation of shipping business in the hands of western companies are the parts of the same chain. In our previous reports we've explained in details how US masterly uses pandemic and control of the global shipping business to struggle against its major economical rival - China. We already see results of this. Big companies intend to open plants in the US and Japan (instead of China), Chinese economy has difficulties showing slowdown of production, rising inflation and unemployment, while PBoC has cut the rate which hasn't happened for the very long time, pushing renminbi to the new lows. Next step is consolidation of the global shipping for total control and Maersk deal is important step. While ecological plans of CO2 control in shipping business de facto makes impossible to use alternative shipping companies for Chinese companies. In general all this stuff with CO2 control and planet overheating is bullsh*t, but it is great tool of geopolitical war. All "green" technologies are very expensive and can't be widely adopted by emerging countries and their companies. At the same time the US and EU could put the restrictions that you can't buy/sell or consume in any way, or ship and deliver any goods (and food!) that are not "green". So, the US and EU markets soon will be closed for any emerging markets goods and companies. US and EU banks will be forbidden to finance any projects if they are not "green". It means that emerging markets and companies will loose west money. Speaking on the shipping business - it will be forbidden to ship in EU or US cargoes by "non-green" ships. Absolutely the same as it has become with the planes once.

What will happen with the Chinese economy if they will lose US and EU consumers and access to the western capital market? They just not survive. At some breakeven point, it starts taking irreversible changes In Chinese economy, which, like a spiral, starts pushing country in depression. Pandemic is called to provide an information background for this process. Taking it all together, even despite some tensions between US and Russia concerning Ukraine etc., - gold perspective looks optimistic. Because the destruction of the China as world's largest supplier leads to strong inflation, just because of goods' deficit. Interest rates, even with anticipation of 2.1-2.25% Fed rate, will not be enough to compensate return, i.e. real interest rates with high degree of certainty remains negative for few years, at least until 2024. And only when the US will return global domination in production, situation should start stabilizing. This is our view by far. Only unexpected destructive political process inside the US could break this plans. When the US will be unable to complete started trade war. It is difficult to predict, but it is not as impossible as it seems at first glance. Anyway, right now we see how the US is constantly moving with its plan that already brings first fruits.
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Technicals
Monthly

December still is an inside month and makes no impact on the picture. The major achievement of the last week is reaching of 1758$ major support with following healthy upside bounce.

Once we've mentioned that overall price performance doesn't look truly bearish in long term. Market stands too close to the top, forming tight consolidation and has not reached even 3/8 major support. And potential appearing of pennant pattern just confirms this. This in turn, cares signs of bullish dynamic pressure, as market stands tight while MACD is going down...

In short-term market is flirting with YPP and breaking of 1875 top might become important moment. The support line that makes shape of triangle here seems to be more important at current moment.

Speaking about upside target, we have very thrilling combination. Major COP is completed, but we also have all-time COP, when A point equals to ~ 40$ - fixed gold price to US dollar before the Bretton Wood. In this case all time COP agrees with YPR1 around 2165$. This is next nearest target on gold...

gold_m_27_12_21.png


Weekly

Now the retail broker chart, additionally to the CME futures last week, shows that we have the grabber. This pattern seems important and suggests action above 1870 top, meaning that "blue" ab-cd pattern should keep moving to the next target. With the large "red" AB-CD next destination point is OP around 1922 - major Fib resistance area. Hardly we will see big changes next week, as investors will wait for the new year and ending of the holidays to start rebalancing of portfolios. Invalidation point of this bullish scenario is recent lows around 1750$:
gold_w_27_12_21.png


Daily

Here we do not have something new, trend stands bullish and market has started upward action from major 5/8 support area. Actually we've got two chances to buy already. Now we need to keep an eye on the lower time frames, to see how situation develops.
gold_d_27_12_21.png



Intraday

On 4H chart we could also recognize the H&S shape with the major target around 1846$.
gold_4h_27_12_21.png


But on the 1H chart we have few bearish grabbers, suggesting that it might be deeper retracement before upside reversal finally happens. Most probable it could reach 1776 Fib support. Thus, if grabbers will not be cancelled next week - another chance for entry could be formed:

gold_1h_27_12_21.png
 

Vokin

Private, 1st Class
Messages
25
Hi Sive.
Great analysis as always.
But at one point I have a slightly different view. I do not think that the loss of markets in Europe and the USA will have a catastrophic impact on the Chinese economy.
First, the Chinese economy alone is large enough to absorb these losses.
And secondly, what is not much written about is the conclusion of economic agreements with Russia (it has an economic alliance with Turkey), and if we add India to this bloc?
A huge free economic unit is looming here, unburdened by bureaucracy, corruption and stupidity like a crumbling EU or a USA burdened with a lot of its own internal problems.
Regards
Vokin
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Hi Sive.
Great analysis as always.
But at one point I have a slightly different view. I do not think that the loss of markets in Europe and the USA will have a catastrophic impact on the Chinese economy.
First, the Chinese economy alone is large enough to absorb these losses.
And secondly, what is not much written about is the conclusion of economic agreements with Russia (it has an economic alliance with Turkey), and if we add India to this bloc?
A huge free economic unit is looming here, unburdened by bureaucracy, corruption and stupidity like a crumbling EU or a USA burdened with a lot of its own internal problems.
Regards
Vokin

Well, i was just looking at the population amount. The US and EU together (here actually we should add the Canada, GB, Australia as well) stands for ~ 1.5-2 Bln of relatively rich population that is ready to consume all line of Chinese goods.
Russia is just 150 Mln, India and Pakistan together - yes, big enough, with the China itself, but the wealth... All these countries are relatively poor. Maybe some day indeed, agreements will be signed and export production will be regrouped and re-organized for the needs of countries that you've mentioned. In current moment China production is mostly oriented on the US and developed countries. And the whole power and wealth that China has accumulated - comes from the west.
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Greetings everybody,

So, gold is tending higher this morning. Grabbers that we were worry about haven't led to serious downside action and only minor pullback has happened yesterday. Here price is challenging the neckline of our H&S pattern, nearest COP target @1822 stands at the horizon.
gold_4h_28_12_21.png


So, if you would like to take the position - it would be better to wait for reaction on COP target, because we also have 1829 major 5/8 Fib resistance level there (not shown). And it will be just safer to enter on the pullback. Most probable areas are 1810 and 1800. 1H chart also point on the same target as XA swing extension. We probably could draw it as butterfly as well...
gold_1h_28_12_21.png
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Greetings everybody,

So, gold is turning down slowly. Although we've thought it should be from COP but it barely has not reached it. Anyway, on daily chart everything mostly stands the same and no real bearish signs exist by far:
gold_d_29_12_21.png


On 4H chart we're still dealing with the H&S pattern. And the fact that price is turning down from the neckline can't be called as bullish and friendly. Still as our longs are with the breakeven stops already, we could try to keep them, at least until price stands above few 1H support levels.
At the same time it seems that it would be better to wait longer with taking of new positions:
gold_4h_29_12_21.png


On 1H chart we do not have clear downside AB-CD patterns, but we have Fib levels. Price already stands at the first one that we've mentioned yesterday. But overall downside action relatively fast, which makes us think that it would be better to look at 1795-1798 K-support area. Besides, maybe "222" Buy will be formed here...
Speaking on scalp short positions - theoretically it is possible once gold forms any bearish patterns. For example, it might be H&S with the same 1795-1798 destination point....
gold_1h_29_12_21.png
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Greetings everybody,

So, as the EUR, Gold has shown downside pullback yesterday to predefined K-support around 1795$. Technically it was reaction on rising interest rates that have completed "222" Sell pattern on daily chart that we've mentioned earlier as well. Here it is:
1640847464690.png


Since today is the last trading session of the year, tomorrow, if I do not miss something, COMEX is closed. So it is another question whether to participate or not... anyway, this "222" pattern on the interest rates is the core for short-term trading on gold market as well.

Since this pattern suggests 30% pullback, it provides nice opportunity to buy gold with low risk and high chance for breakeven stop later. On 4H chart market hits support area and formed large "Morning star" pattern. Now price shows the retracement back inside it:
gold_4h_30_12_21.png


It means that for position taking, we need to get some minor bullish pattern on 1H chart. With the current price shape, it seems that most probable that we get "222" Buy. With just 4$ stop below recent lows (as it is based on the pattern on 10-year interest rates), we could get nice short-term setup with high odds to turn it riskless and potential minimum target around 1808$... Bullish divergence here also doesn't exclude that upward reaction might be stronger, but right now we do not count on it.
gold_1h_30_12_21.png
 

Vokin

Private, 1st Class
Messages
25
The tiger is not sleeping ...https://www.forexlive.com/news/the-worlds-largest-trade-deal-will-come-into-force-on-1-january-2022-20211230/
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
The tiger is not sleeping ...https://www.forexlive.com/news/the-worlds-largest-trade-deal-will-come-into-force-on-1-january-2022-20211230/
Well, taking in consideration AUGUS military block and Australia-China relationships, it seems this agreement is late a bit... :confused:
 

Sive Morten

Special Consultant to the FPA
Messages
15,946
Greetings everybody,

First of all, we wish you Happy New Year and have a good time with your close ones. Pay them attention they really need it and wait for it.

Speaking on gold - we've got great performance. I would point couple of moments. First is - gold reaction is much stronger than retracement on the interest rates. It means that metal has healthy sentiment. Besides, we should not forget about our longer term technical positive view and supportive fundamental background.
Thus, on daily chart everything seems nice:
gold_d_31_12_21.png


On 4H chart it was very important action, as gold was able to stay above vital area and keep H&S shape. Price now is taking the shape of wide flag and nearest target is the same - 1822-1824 area of COP and the flag's border.
gold_4h_31_12_21.png


Yesterday it was a bit difficult to catch the entry. Although we've correctly determined the support level, we were watching for 2-leg retracement and "222" pattern, gold has shown just 1-leg and turned up. So, not everybody probably was able to catch it. If you did - congratulations as you've got very good entry.

But, others should not upset, as we have long term setup and it seems that now it would be better to not try to jump in running train. As price is coming to the 1822 area - we should get some bounce next week, that we try to use for the entry...
gold_1h_31_12_21.png
 
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