GOLD Price Analysis – Dec 13, 2024
Daily Price Outlook
Despite the strong US dollar, gold prices (XAU/USD) have continued to rise, reaching around the 2,692 level. This rally is driven by growing geopolitical tensions, such as the ongoing Russia-Ukraine conflict and escalating issues in the Middle East, which are prompting investors to seek the safety of gold.
Besides this, the concerns over US President-elect Donald Trump's potential tariff plans are further boosting gold's appeal as a reliable investment during uncertain times.
Moreover, the Federal Reserve is expected to cut rates for the third consecutive time at its December meeting, providing additional support for gold. However, the potential for further gains may be limited, as the Fed is likely to be cautious with more cuts, given that inflation remains above the 2% target.
Meanwhile, rising US Treasury yields are helping to keep the dollar strong, which could cap gold’s upward movement. As a result, traders are likely to adopt a wait-and-see approach ahead of next week's crucial FOMC meeting.
Impact of US Inflation Data and Fed Rate Cut Expectations on Gold Prices
On the US front, the broad-based US dollar extended its upward rally and remained bullish as a result of the hotter-than-expected US Producer Price Index (PPI) report released on Thursday.
The US PPI increased by 0.4% month-over-month (MoM) in November, marking the largest gain since June. This came after an upward revision of the October PPI, which had risen by 0.3%. The November reading was higher than the expected 0.2% increase, which helped boost the US dollar.
Looking ahead, the US Federal Reserve's interest rate decision will be the main focus next week. Traders are anticipating a 25 basis point rate cut on December 18, according to the CME FedWatch Tool.
In addition, the US Consumer Price Index (CPI) rose to 2.7% year-over-year (YoY) in November, up from 2.6% in October.
In the meantime, the headline CPI showed a 0.3% MoM increase, which was in line with market expectations.
The core CPI, excluding food and energy prices, climbed 3.3% YoY and increased 0.3% MoM, also in line with forecasts. These inflation figures are likely to influence the Fed's next move on interest rates.
Therefore, the stronger US dollar, driven by higher-than-expected inflation data, may put pressure on gold prices, as a stronger dollar makes gold more expensive for foreign buyers. Additionally, expectations of a Fed rate cut could limit gold’s upward momentum.
Impact of China's Economic Outlook and Middle East Tensions on Gold Prices
On the other hand, China's positive economic outlook, with President Xi Jinping expressing confidence in meeting this year's targets, could support global growth, indirectly benefiting gold. China's Trade Balance (CNY) rose to CNY 692.8 billion in November, up from CNY 679.1 billion in October.
Exports grew by 1.5% year-over-year, while imports increased by 1.2% YoY, signaling a recovery in trade. Despite the slower pace compared to previous months, these positive figures show resilience in China's economy, which could help stabilize market sentiment.
Meanwhile, escalating tensions in the Middle East, including an Israeli airstrike that killed at least 30 Palestinians in Gaza, are driving safe-haven demand.
As geopolitical instability increases, investors often turn to gold as a secure asset, leading to higher demand for the precious metal.
This combination of China's economic strength and the rising global uncertainties could push gold prices higher as investors seek safety amidst market volatility.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) trades at $2,682.67, edging up 0.07% on the 4-hour chart. Prices remain supported by the pivot point at $2,679.33, with immediate resistance at $2,701.96. Further upside could target $2,719.88 and $2,732.71 if bullish momentum strengthens.
On the downside, immediate support is at $2,661.04, followed by $2,647.09 and $2,627.43, levels traders should monitor closely for potential breakdowns.
The 50 EMA at $2,686.62 indicates a neutral-to-bearish short-term trend, with gold trading slightly below this key average. Meanwhile, the Relative Strength Index (RSI) at 45 reflects balanced momentum but leans toward bearish sentiment, suggesting limited upside unless buyers regain control.
Gold’s current setup suggests cautious optimism, with a Buy Limit entry near $2,682 targeting $2,700, while a Stop Loss at $2,672 safeguards against downside risks.
A sustained move above $2,701.96 could confirm a broader bullish breakout, while failure to hold the pivot at $2,679.33 may lead to retests of lower support levels.
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