Gold bulls were understandably frightened coming into the week on the possibility of a hawkish Fed and dwindling risk appetite due to omicron.
Yesterday, gold touched $1753 in the immediate aftermath of the FOMC decision, which is the lowest since October 12. The lows lasted just moments though and the dip buying started immediately and has continued through today.
As I've been highlighting recently, gold sentiment is awful. The bulls are downtrodden and spec longs are tiny.
But that's exactly the kind of thing you want to see near a bottom. Moreover, it was hit with the bad news of a hawkish Fed and rallied anyway. Now that's not just a gold story as much of the market has moved against the Fed narrative but it's a start.
Perhaps more importantly, the gold seasonal trend is kicking off now and runs into February. It's one of the strongest seasonal patterns out there so that's something to build off as well.
Technically, the high today is the best since November 30 and that's a nice two-day reversal. It's a long ways to go to get any real momentum but today's price action (if it holds), is a promising start. Also note the potential for a close above the cluster of the 100-day and 200-day moving averages.
