World gold prices have just experienced a week of correction but still stand firm above the 55-day moving average. The market is focusing its attention on the 4,541 USD/ounce zone - an important resistance level in the near future.
According to the latest report from the World Gold Council (WGC), LBMA gold price in the afternoon session last week decreased by about 0.9%, to 4,348 USD/ounce. This decrease caused gold performance from the beginning of the year to turn slightly negative, about 0.4%.
Gold prices fell in the first sessions of the week as the market prepared for the first interest rate hike of the US Federal Reserve (Fed) in 3 years. However, the subsequent decline was not maintained as gold prices recovered.
On the daily spot gold price chart, WGC said that the precious metal has been tested and currently still maintains the 55-day moving average, at around 4,273 USD/ounce.
This is also the area corresponding to the 61.8% Fibonacci retreat of the increase in June and August. The fact that gold prices maintain this support zone opens up the possibility that the market will continue to test higher resistance zones.
Gold price faces 4,541 USD resistance
According to WGC's technical analysis, the first resistance zone for gold is currently at 4,443 USD/ounce. If this threshold is exceeded, the market will continue to face the 4,511 USD/ounce zone, before heading towards the 200-day moving average at around 4,541 USD/ounce.
WGC assesses that a closing session exceeding the 200-day moving average is necessary for the short-term trend to become more positive. At that time, the next resistance zones are determined at 4,592 USD/ounce, before heading towards the recent high of 4,696 USD/ounce and the 4,769-4,774 USD/ounce zone.
In the opposite direction, if gold prices do not maintain the support zone of 4,273 USD/ounce, downward pressure may increase. The next support zones are identified by the WGC at 4,236-4,231 USD/ounce, 4,203 USD/ounce, 4,166 USD/ounce and 4,149 USD/ounce.
Notably, if gold prices sustainably break the 4,231 USD/ounce zone, downward pressure may increase further. At that time, the market may head towards lower zones, including 4,000 USD/ounce and the year-end bottom of about 3,943 USD/ounce.
Cash flow into gold ETFs accelerates
Besides technical signals, the movement of cash flow on the gold market was also recorded by the WGC.
According to reports, capital inflows into global gold ETFs are accelerating, while net buying positions for gold futures on the COMEX exchange decreased last week.
Some investors have exercised gold ETF options before maturity, contributing to promoting capital inflows into funds. Meanwhile, gold futures options traders continue to raise positions in the direction of price increases before maturity.
Market positioning data in the report also shows that the net buying volume of money managers on COMEX is still significant, while the net buying position of the group of 20 large investors on the Shanghai Futures Exchange was also monitored during the week.
In the short term, 4,273 USD/ounce and 4,541 USD/ounce are two noteworthy price zones. The 4,273 USD mark plays an important supporting role, while 4,541 USD is a technical threshold that the WGC especially notes if gold prices continue to recover.
