Before yesterday, gold prices only moved down to test the 100-day moving average (red line) twice this year. Yes, that's right. Just twice. The first was in February and the second in November. During both times, buyers held their ground but they fell short of holding the line in trading yesterday.
A hawkish rate cut by the Fed led to a surge in the dollar and rates, weighing on gold prices. That saw a dip below the key technical level into the daily close for the first time since October 2023.
But for today, gold buyers are hoping to try and recover that position. Price is up 0.9% to $2,609 currently with the 100-day moving average seen at around $2,605.93. It's definitely a key battle for control now in determining the next steps for gold.
For buyers, moving back above the 100-day moving average will provide some technical comfort. Otherwise, a firm break below that might lead to a further technical correction that could run much, much deeper on added profit-taking activity as well.
The tricky part in all of this is that we're into the final stretch of the year already over the next few sessions. It will be hard to read into price action beyond this week as flows will thin out for the remainder of the year.
And then there's also the seasonal tailwind in January to consider, as that has been the best month for gold prices in the last two decades.
All of this is definitely making it tough to get a good read on what will come next for gold. But at least the technical showing above might provide some idea, before traders return in full force in the new year.
