GOLD Price Analysis – Dec 03, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its upward momentum, remained well bid around the 2,647 level and briefly reaching a high of 2,650 on the day.
However, the precious metal’s strength was largely fueled by concerns over US President-elect Donald Trump’s proposed tariff plans, ongoing geopolitical tensions, and expectations that the Federal Reserve may implement another interest rate cut this month.
Although, the slight rise in US Treasury bond yields and renewed strength in the US Dollar could dampen gold’s potential for further gains, as gold lacks the yield offered by other assets. Traders are likely to wait for more clarity on the Federal Reserve's plans for interest rate cuts before making major moves in gold.
Moving ahead, the attention is focused on important US economic data, particularly the Nonfarm Payrolls (NFP) report on Friday. Fed Chair Jerome Powell’s speech will also be closely watched for any clues about future rate changes.
In the meantime, the US JOLTS Job Openings report offer traders short-term opportunities to respond to changes in gold prices (XAU/USD).
US Dollar Strength and Fed's Mixed Signals Create Uncertainty for Gold
On the US front, the broad-based US dollar has been rising to three-day highs, pushing the pair lower. However, the stronger USD comes after the US ISM Manufacturing PMI rose to 48.4 in November, higher than the previous reading of 46.5 and the expected 47.5. This stronger-than-expected data gave the US dollar a boost.
Meanwhile, key Federal Reserve officials are weighing the possibility of further interest rate cuts. Atlanta Fed President Raphael Bostic mentioned on Monday that he is undecided about whether a rate cut is necessary in December.
However, he still believes that the Fed should continue lowering rates over the next few months. His comments suggest that the Fed may not take immediate action but is leaning toward easing in the future.
New York Fed President John Williams also pointed out that the Fed may need to cut interest rates further to achieve a neutral policy stance, as inflation and employment risks have become more balanced.
In the meantime, Fed Governor Christopher Waller stated that he is leaning toward supporting a rate cut in December, expecting inflation to continue easing toward the Fed's 2% target. These mixed signals from Fed officials add uncertainty to the outlook for US monetary policy.
Therefore, the rising US dollar and mixed signals from Fed officials about rate cuts create uncertainty, limiting gold's upside. If the Fed moves toward rate cuts, it could support gold, but a stronger dollar may cap further gains.
GOLD (XAU/USD) – Technical Analysis
Gold prices continue to show resilience, edging up 0.33% to $2,647.74 as of the latest trading session. The metal has managed to sustain itself above the critical pivot point at $2,636.59, supported by a moderately bullish sentiment on the 4-hour chart.
With the 50 EMA holding steady at $2,643.11, the short-term trend suggests potential upward momentum, though further confirmation is required.
Immediate resistance lies at $2,666.19, which aligns with the projected take-profit level for intraday traders. A break above this level could expose $2,686.59, followed by the key psychological threshold of $2,704.92.
On the downside, immediate support rests at $2,622.74, with further declines potentially testing $2,604.95 and $2,586.53. Traders are advised to monitor these levels closely as a breach could signal a deeper retracement.
Technical indicators present a mixed outlook. The RSI hovers around 50, indicating a neutral sentiment with room for directional movement depending on price action. The market's sensitivity to upcoming economic data and geopolitical developments could play a pivotal role in defining the trend this week.
Given the current setup, a buying opportunity emerges above $2,636, targeting $2,666 while maintaining a disciplined stop-loss at $2,620. This strategy balances the ongoing bullish undertone with the potential for temporary retracements.
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