GOLD Price Analysis – Dec 10, 2024
Daily Price Outlook
Gold prices (XAU/USD) lost some of their intraday gains but remained supported around the $2,663 level, having reached a high of $2,673 earlier.
The recent upward movement can largely be attributed to growing concerns in the global landscape, especially amid the ongoing Russia-Ukraine war and political instability in South Korea and France. These uncertainties have pushed investors toward safe-haven assets like gold.
Meanwhile, the US Dollar has gained some strength, bouncing back from a nearly one-month low after the positive Non-Farm Payroll (NFP) data.
There’s also speculation that the Federal Reserve will take a cautious approach to interest rate cuts, which has somewhat pressured gold’s rise.
On the other hand, China’s central bank resumed gold purchases after a seven-month pause, adding further support.
Additionally, the expectation that the Fed will lower interest rates later this month is keeping US Treasury yields suppressed, helping to limit any significant downside for gold.
China's Economic Confidence and Gold Buying Boost Market Stability
On the China front, the central bank's decision to resume gold buying for the first time in seven months is expected to provide strong support to gold prices, which are seen as a safe-haven asset.
This move, along with positive economic signals from China, has boosted investor confidence. Chinese President Xi Jinping stated on Tuesday that China is fully confident in meeting its economic targets for the year.
He also reassured the world that China will continue to be the biggest driver of global economic growth. His comments aimed to calm concerns about China’s economic slowdown, emphasizing that the country’s role in the global economy remains vital.
In addition, China’s trade balance showed a positive trend, expanding to CNY 692.8 billion in November, up from the previous month’s CNY 679.1 billion.
Exports grew by 1.5% year-over-year in November, although this was slower than October’s 11.2% increase. Imports also rose by 1.2% YoY, recovering from a 3.7% drop earlier.
Xi Jinping further stressed that there would be no winners in tariff, trade, or tech wars, highlighting China’s stance on avoiding conflict in these areas and seeking peaceful economic growth.
These developments have helped maintain stability in the market, supporting both the Chinese economy and gold prices.
USD Gains Momentum Ahead of CPI Data and Fed Rate Cut Speculations
On the US front, the US Dollar (USD) is on a three-day winning streak as traders remain cautious ahead of the US Consumer Price Index (CPI) data release on Wednesday.
The market is closely watching the data, as it could influence the Federal Reserve’s next move on interest rates. Currently, traders are betting on an 85.8% chance that the Fed will lower rates by 25 basis points on December 18, based on the CME FedWatch Tool.
The recent US jobs report for November showed strong growth, with 227,000 new jobs added, far surpassing expectations. Additionally, Average Hourly Earnings grew by 0.4% month-over-month, showing steady wage growth.
These positive employment figures have added to the anticipation of a rate cut by the Fed, but traders are waiting for the CPI data to get more clarity on future monetary policy.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,668.80, up 0.31%, maintaining a bullish stance above its pivot point at $2,658.36. The 4-hour chart reflects strong upward momentum, supported by the 50-day EMA at $2,647.36, which serves as a robust near-term support level.
The Relative Strength Index (RSI) at 65 indicates sustained buying interest but warns of approaching overbought territory, suggesting possible consolidation ahead.
Immediate resistance is observed at $2,676.72, with further hurdles at $2,688.97 and $2,704.36. These levels present critical milestones for continued bullish momentum.
On the downside, immediate support is situated at $2,646.20, with deeper safety nets at $2,635.36 and $2,617.67. A break below these levels could trigger increased selling pressure, potentially challenging the broader bullish outlook.
The price action reflects a well-defined upward trajectory, driven by geopolitical uncertainty and renewed interest in gold as a safe-haven asset.
A sustained break above $2,676.72 would solidify the bullish narrative, targeting $2,688.97 as the next key level. Conversely, a failure to hold $2,658.36 could signal a bearish retracement, testing immediate support zones.
Gold traders should closely monitor resistance at $2,688.97 and RSI levels to anticipate potential reversals. A cautious approach is advised, with strategic entries above $2,658 and stops placed at $2,646 to manage risk effectively.
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