Gold Futures Under Pressure: What to Expect in the Coming Week
Movements of the Gold Futures in the last two weeks indicate extreme weakness is likely to continue as Fed Chair Jerome Powell, along with other speakers, repeatedly mentions that interest rates will likely rise further.
Since I wrote my last piece, gold futures started to slide from $1917.
Last week, gold futures tried to hold above $1879 but faced stiff resistance at $1888 and tumbled down as the non-farm payrolls reading for January came out, due to extended selling pressure.
Last Friday, movements in gold futures showed a sudden surge in volatility as short-term treasury yields suddenly surged.
Weakness could grow ahead if gold futures start the upcoming week with a gap-down opening and sustain below the immediate support at $1869.
A breakdown in gold futures below the significant support at $1847 could increase the sliding speed during the upcoming weeks.
On the other hand, increasing tension between the U.S. and China seems to favor gold bulls since the Biden administration on Friday added six Chinese entities connected to a suspected surveillance balloon program to an Export-blacklist.
The new restrictions come after the White House said it would consider broader efforts to «expose and address» China’s surveillance activities that threaten U.S. national security and allies.
This tussle between the two countries could impact gold prices after a U.S. F-22 fighter jet shot down an unidentified object flying high over Alaska on Friday, less than a week after the military brought down a Chinese balloon, which had flown across the United States.
Gold Futures Weekly Chart
Technically speaking, in a weekly chart, the formation of an exhaustive candle ensures a steep slide ahead if gold futures do not sustain above $1902.
If gold futures start the upcoming week with a gap-down opening, this exhaustive weekly candle could get a confirmation candle.
Gold Futures Daily Chart
In a daily chart, a bearish crossover confirms increasing selling pressure that limits the upside at $1888, where 9 DMA will provide stiff resistance in case of an upward move. The second resistance will be at 18 DMA, which is at $1910, which could attract gold bears to command the scenario during the upcoming week.