Gold: Consolidation with cautious optimism – OCBC

Christopher Wong at OCBC sees Gold consolidating after reaching a two-week high above 4140. While rebounding oil prices and a steadier US Dollar limit gains, softer Treasury yields and Gold's resilience amid the equity selloff suggest renewed safe-haven appeal. However, broader deleveraging remains a risk ahead of key US data. Wong remains cautiously optimistic, highlighting resistance at 4146 and 4190/97, with support at 4065/75, 3960/80 and 3870.

Safe-haven appeal tested by liquidity

"Gold pared earlier gains after rising to a two-week high above 4140 at one point overnight. The subsequent rebound in oil prices and some stabilisation in USD limited further upside momentum, although softer US Treasury yields continued to lend support. Meanwhile, the deepening selloff in AI and semiconductor stocks warrants some near-term caution."

"Should equity weakness trigger broader deleveraging, gold may not be spared from liquidity-driven selling as investors raise cash."

"That said, gold’s relative resilience despite the sharp equity selloff is encouraging. Following the recent correction and reduction in speculative positioning, gold may be gradually regaining some of its safe-haven appeal, potentially providing shelter amid turbulence elsewhere in financial markets. The extent to which gold can hold up if equity weakness persists will be an important test."

"Some consolidation remains likely ahead of US payrolls report tonight. Softer employment data could further temper Fed tightening expectations, weigh on yields and USD, and allow gold’s recovery to extend. Next Tuesday’s US CPI will be another key test, while oil prices remain an important driver of inflation and rate expectations."

"Daily momentum turned mild bullish but rise in RSI moderated. Consolidation likely after the recent sharp rebound. Immediate resistance at 4146 (overnight high) before 4190/97 levels (38.2% fibo, 50, 100 DMAs). More confidence should return if gold can reclaim key resistance. Support at 4065/75 levels (21 DMA, 23.6% fibo retracement of Aug high to Oct low), 3960/80 levels and 3870 (Oct low)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)