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Gold prices surged to a 5-week high yesterday, with the COMEX Gold February 2025 (Feb ’25) contract closing at $2,750.8/oz. Hugo Pascal, Chief Investment Officer at InProved, shared an analysis of the daily key levels for Feb ’25 gold in a recent LinkedIn post. He highlighted the 68.2% retracement range of $2,725 to $2,777 (-/+ 1 standard deviation), a 25 Delta Risk Reversal at 0.7, and a significant call wall at $2,800.
These indicators reflect a market poised for potential breakout activity, shaped by technical levels, sentiment, and speculative interest. Let’s unpack these details to understand what’s driving gold prices and what traders should watch in the days ahead.
Gold’s climb to $2,750.8/oz comes amid a confluence of supportive factors:
1. Macroeconomic Uncertainty:
Persistent concerns about inflation, potential central bank policy shifts, and geopolitical tensions have fueled safe-haven demand for gold.
2. Weaker Dollar Trend:
A softer US dollar has made gold more attractive to international buyers, providing additional price support.
3. Speculative and Investment Demand:
The COMEX market has seen increased speculative activity, with traders positioning for potential upward momentum in the gold market.
1. 68.2% Retracement Zone: $2,725–$2,777 (-/+ 1 Standard Deviation)
This retracement range, derived from Fibonacci levels, is a key technical indicator for identifying support and resistance zones. The addition of one standard deviation highlights the range where prices are statistically likely to fluctuate under normal market conditions.
2. Call Wall at $2,800
The call wall represents a significant concentration of call options at the $2,800 strike price. This level often acts as a psychological and technical resistance point.
3. 25 Delta Risk Reversal at 0.7
The 25 Delta Risk Reversal measures the difference in implied volatility between calls and puts of the same delta. A positive value, like 0.7, indicates a bullish bias in the market, as traders are paying a premium for call options over puts.
The interplay between these key levels and market dynamics offers several takeaways:
1. Short-Term Resistance at $2,800:
The call wall at $2,800 represents a critical hurdle. A successful breach could open the door for further price gains, while failure to break this level might result in consolidation or retracement.
2. Bullish Sentiment Intact:
The positive 25 Delta Risk Reversal indicates a market leaning toward bullish expectations, supported by robust demand and speculative interest.
3. Key Support at $2,725:
Traders should watch the lower boundary of the 68.2% retracement range for signs of support. A drop below this level might shift sentiment and invite bearish activity.
As gold trades near $2,750/oz and approaches critical technical levels, Hugo Pascal’s analysis provides valuable insights for navigating the market. The interplay between the 68.2% retracement range, the call wall at $2,800, and a positive 25 Delta Risk Reversal underscores the importance of understanding both technical and sentiment-driven factors.
For traders and investors, the coming days will be pivotal. Whether gold breaks through the $2,800 barrier or retreats to test support levels will shape the narrative for the Feb ’25 contract and broader market trends.
Stay informed by following Hugo Pascal on LinkedIn and exploring InProved’s in-depth coverage of precious metals and market insights.
Hugo Pascal’s observation about the AU9999 contract hitting a 10-week volume high underscores the increasing significance of physical gold trading on the Shanghai Gold Exchange. This trend not only highlights robust domestic demand in China but also reflects broader shifts in the global gold market toward physical-backed assets.
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