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Are we seeing the first indications of a correction in gold?

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This year has been one of the most interesting for investors and traders who have been active in gold. There were two of his completed trends, including both multi-month rallies and multi-month adjustments. In the first week of January, gold was already in uptrend mode, and on the first trading day of January 3, he opened at $1,827. As a result, gold rose by around $251.

What followed was a multi-month correction that saw gold trading to a low of around $1,620 from March 8 through the final week of September. Friday tests this level three times from September through the first week of November. During this correction, gold trades through a series of multiple highs and lows, technically confirming that gold has entered a fully bearish scenario.

Another indication is that the three moving averages have moved in a completely bearish direction (Chart 2 above). This continues to this day. In a perfect bearish correction with 3 moving averages, the longest average (200 days) has the highest price, followed by the 100 day moving average, followed by the 50 day moving average. The 200-day moving average is currently at $1808.60. The 100-day moving average is $1727.50 and the 50-day moving average is $1681.

Chart 3 is a four-hour Japanese candlestick chart of gold futures that highlights the past three highs. After hitting a high of the year in March, the price of gold has fallen, possibly marked by four consecutive lows below highs. However, as you can see in the chart above, his first two low highs occurred in mid-August, when gold hit a high of $1825. This was followed by a new high at $1738 in early October.

Gold reached around $1,620 for the third time in early November, ending a months-long correction and starting its rally. Yesterday, gold hit a high of $1782, turning down in the last 24 hours. As of 5:16pm, EST gold futures are currently pegged at $1762.80 after taking into account today’s $13 or 0.73% drop. This suggests that yesterday’s high marks the end of this leg of the current rally, followed by a correction that lowers gold and pushes prices down. If the current correction rises above the previous lows, it would be confirmation that the multi-month correction is indeed complete.

Gold’s decline over the past 24 hours builds on recent comments by members of the US Federal Reserve that they will not abandon their current hawkish monetary policy to continue to drive inflation down to acceptable levels. suggests. Core PCE is still around 6%, three times the Federal Reserve’s target level of 2%.

The volume of each rate hike is likely to be less, but their endgame still needs to bring inflation closer to target levels. Therefore, we may see a rate hike of 50 basis points instead of 75 basis points, although the Fed indicated today that it will continue to raise rates until its goal of lowering inflation is met.

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Disclaimer: The views expressed in this article are those of the author and may not reflect the views of the author Kikko Metals Co., Ltd. The author has made every effort to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the authors can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation of an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the authors of this article accept no liability for loss and/or damage resulting from the use of this publication.

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