GOLD Price Analysis – Dec 05, 2024
Daily Price Outlook
Gold prices (XAU/USD) are struggling to find a clear direction due to mixed factors. However, the geopolitical risks from the Russia-Ukraine conflict, trade wars, and political instability in France and South Korea are supporting gold as a safe-haven asset.
Apart from this, the weaker US dollar also helps, but expectations for the Federal Reserve to take a less dovish stance are keeping gold from rising too much.
Although, the comments from Fed officials suggest they won’t rush to cut rates, which is limiting gold’s gains. Traders are waiting for the US Nonfarm Payrolls (NFP) report on Friday for more direction.
Mixed US Economic Signals and Global Risks Weigh on Gold Prices
On the US front, the broad-based US sollar has struggled to gain traction despite some positive signals from the Federal Reserve. The Beige Book revealed that US economic activity grew slightly in most regions, with inflation rising modestly.
Fed Chair Jerome Powell highlighted the economy’s strength, which exceeded expectations, suggesting the Fed could slow its pace of rate cuts.
Similarly, San Francisco Fed President Mary Daly noted no urgency for rate reductions, emphasizing the need to focus on achieving the 2% inflation target and steady growth. Markets are now pricing in a 77.5% chance of a December rate cut but remain cautious.
Meanwhile, US bond yields rebounded slightly after recent lows, putting some pressure on non-yielding assets like Gold. Speculation about President-elect Donald Trump’s policies potentially driving inflation adds to expectations that the Fed may pause or even reverse its rate cuts.
However, weaker-than-expected US economic data, such as the ISM Services PMI and S&P Global Composite PMI, reflects some slowing momentum, keeping the market outlook uncertain.
Traders are now closely watching upcoming economic reports for more direction. Thursday’s US Weekly Initial Jobless Claims could provide short-term momentum, but the spotlight remains on Friday’s Nonfarm Payrolls (NFP) report for clearer signals on the economy and Fed policy.
Therefore, the mixed US economic signals, with slower growth and uncertain Fed actions, put downward pressure on Gold due to rising bond yields. However, ongoing concerns about global trade wars and inflation risks continue to support Gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,645.99, down 0.17% during the session, reflecting a cautious sentiment as the price remains slightly below its pivot point at $2,639.81. This indicates a neutral to bearish outlook in the short term, with traders watching for a breakout or sustained directional move.
Immediate resistance is located at $2,666.19, with subsequent levels at $2,686.65 and $2,704.46. On the downside, support rests at $2,621.48, with additional levels at $2,604.95 and $2,586.53.
Technical indicators suggest a mixed outlook. The Relative Strength Index (RSI) at 53 indicates neutral momentum, while the 50-day EMA at $2,646.06 aligns closely with the current price, acting as a short-term resistance.
A symmetrical triangle pattern signals potential for a breakout, with a move above $2,666.19 likely triggering bullish momentum toward higher resistance levels. Conversely, failure to hold above $2,639.81 could invite selling pressure, targeting key support at $2,621.48.
Traders should monitor market sentiment and global economic data for further cues. Entry is recommended above $2,640, targeting $2,666, with a stop-loss set at $2,625 to mitigate downside risk.
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