Gold is set to log its second consecutive weekly loss

Gold is set to log two consecutive weeks of losses after appreciating  about 9.0% within a 3-week period. It has been consolidating below the $2,000 level since the beginning of November 2023.

Powell’s speech this week has not moved the needle for precious metals as it can be considered a ‘nothing burger’. Powell reiterated he is unsure they have done enough, and left the door open for more interest rate hikes to bring inflation down.

Call options continue to be well bid, despite tentatively pricing in a smaller risk of escalation in the Middle east.

Call option at $2,000 strike is showing a 31% chance of being in the money by year end.

$1,900 remains an important level, being the Put wall of all expiries, while $1,950 is  a short term support ( Dec ’23 put wall). A lack of further sell volume will lead to a rise in the metal.

Gold skew remains high as traders continue to bid OTM calls, meaning investors are paying more for an upside exposure to Gold.

Gold seasonality patterns across November and December are  favorable from a historical perspective. The last 22-year on Average Gold increased by 1.4% in November and 1.32% in Dec.

Since the last bull cycle started ( end of 2015 to present), Gold decreased on Av 1.7% in Nov and increased by 2.7% in December.

Bottom line: We remain bullish for year-end as long as we can stay above $1,900.