What is next after gold’s best week in more than 2 years?

The price action of gold, next week, will look for direction mostly from the US dollar which attains a special standing as the key driver for gold’s ability to continue to this week’s rally.

Gold is quickly becoming the asset to watch amid hot inflation as well as when inflation starts to ease. The precious metal is up more than $80, recording its best weekly performance since July 2020. Gold price began the week at $1,681 an ounce and was last trading at $1,765.

The strong turnaround comes after the latest US inflation data showed price pressures slowing. The biggest takeaway for the markets was a possibility of a more flexible Federal Reserve in the coming months. The news sent the US dollar lower, giving gold room to rally.

Market witness momentum and robust comeback of gold after seven consecutive months of losses, which was the longest losing streak in more than 50 years. Gold eventually moved on the combination of election headlines, hope that the Fed will slow rate hiking down, and China reopening.

Gold’s latest rally also coincided with another massive selloff in the crypto space, on news of FTX filing for bankruptcy Friday. The event has a high-level contagion risk that will continue to impact the crypto space and the wider market in general.

Crypto volatility has a much broader reach this time around, which is why gold stands to benefit more than in the earlier months of this crypto sunset.

The circumstance in crypto compared to the summer months have changed. Investors are more concerned than they were earlier this year. The build-up of capital in the crypto market is quite big, but gold acts its traditional role; it remains the trusted and considered a traditional safe haven.

Despite significant gains already posted in gold, analysts see room for the precious metal to move even higher, with highlighting the $1,830 level per ounce as a level that is technically possible next week.

There is still further momentum. Markets could see returning to $1,830 before gold runs into more heavy resistance. That is unless the Fed comes out and tries to give a surprise decision.

For gold, it all comes down to how quickly the Fed’s less hawkish stance comes about. But, it is too early for the US central bank to start backtracking, which is why the precious metal must be patient a bit longer before seeing a renewed bull market sentiment.