As described in the last article on gold, which appeared in early December, the upward movement of XAU/USD (the price of gold in relation to the dollar) has continued since $1788 (about + 5.00%). Thus, the seasonal effect has been confirmed so far.
By yesterday’s close, the share price had risen by around 0.3%. So far today, the price moved further upwards with +0.25%. The price started the medium-term uptrend after a low at around $1617 towards the end of September and has since risen by over 16% at times. At the same time, U.S. inflation has weakened somewhat, falling to a low of 7.1% in November 2022 and again for 5 consecutive months. The peak was 9.1% in June.
In addition, information from the State Administration of Foreign Exchange shows that the Chinese central bank again bought gold in November and December. In the process, the central bank’s gold reserves were increased by 62.2 tons to almost 2011 tons, an increase of 3%. In turn, it sold almost all U.S. government bonds and now holds only $24 billion worth of securities worth more than $1 trillion (Dec. 2021).
In the current uptrend since early November, the price has marked a short-term high at around $1880, where resistance has emerged. The last relevant support has been secured by the price in the $1830 – 1820 area. If the price continues to stay above the support and respects it, this can be interpreted as a trend confirmation and further rises could follow. However, the rising momentum of the current upward movement could also result in corrections, whereby the price could move back to support and test it again.
It remains to be seen whether the seasonal upward movement will be followed by further price increases or whether a correction will set in for the time being.