Technical Analysis

GOLD Price Analysis – Dec 15, 2023

By LonghornFX Technical Analysis
Dec 15, 20234 min

Daily Price Outlook

Despite the Federal Reserve's dovish stance and ongoing selling pressure on the USD, the price of Gold (XAU/USD) struggled to maintain its upward momentum, fluctuating within a narrow trading range below the $2,040 level during Thursday's Asian session. However, the decline in Gold prices can be attributed to the resurgence of US bond yields and a positive risk sentiment, which were key factors contributing to the downward trend.

It should be noted that the previously released upbeat US macro data raised doubts over the possibility of an interest rate cut by the Fed at its March meeting. This has led to a slight rebound in US Treasury bond yields, which, along with the risk-on environment, is seen capping the upside for the safe-haven Gold price.

The global risk sentiment received a boost after the Federal Reserve hinted at the end of its tightening monetary policy. Meanwhile, the upbeat economic data from China on Friday is supporting global stock markets, making investors hesitant to make big moves with gold (XAU/USD).

Mixed Signals Impact Gold Prices Amidst Positive US Economic Data

It's worth noting that positive US economic data on Thursday is making people doubt that the Federal Reserve will cut interest rates soon. This gives a break to US Treasury bond yields and puts pressure on the price of Gold, especially with a positive market mood.

The US Commerce Department shared that Retail Sales in November increased by 0.3%, beating expectations after a revised down 0.2% drop in the previous month. Core Retail Sales, excluding cars, also did better than expected, going up by 0.2%. In the meantime, the Labor Department reported that first-time unemployment claims fell to 202K, the lowest since mid-October.

Despite this, there is still a 60% chance that the Fed might cut rates in March, and the market is 90% sure of a cut in May. The US Dollar is on a four-day decline, reaching a four-month low, which is supporting the price of Gold. Looking ahead, the release of global PMI prints might influence the precious metal, providing opportunities for traders on the last day of the week.

Therefore, the expectation of a potential rate cut in March, coupled with the weakening US Dollar and the Federal Reserve's dovish stance, is bolstering the Gold market. The upcoming release of global PMI data could further influence Gold prices, creating short-term trading opportunities by the week's end.

Positive Chinese Economic Data Dampens Gold Outlook

Furthermore, the positive Chinese economic data is supporting global stock markets and keeping investors cautious about making new bets on XAU/USD. The data revealed a 10.1% year-on-year increase in Retail Sales for November, surpassing the previous 7.6%. Industrial Production also rose by 6.6% YoY, compared to the prior month's 4.6% rise. The National Bureau of Statistics highlighted that the ongoing recovery in demand is aiding improvements in consumer prices, ruling out deflation in China.

Therefore, the upbeat Chinese economic data, with a strong increase in Retail Sales and Industrial Production, supports global stock markets, making investors cautious about Gold. The positive sentiment could weigh on Gold prices as demand for safe-haven assets diminishes.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

In the intricate tapestry of the financial markets, Gold (XAU/USD) presents a nuanced picture on December 15. The precious metal shows a slight increase of 0.02%, reaching $2,036, hovering around critical technical levels. With a pivot point established at $1,897, Gold finds itself at a crossroads between potential resistance and support levels that could dictate its short-term trajectory.

The immediate resistance is set at $1,953, followed by more formidable barriers at $2,049 and $2,105. Conversely, support levels are identified at $1,799, $1,695, and $1,599, which may offer a cushion against potential downturns. The Relative Strength Index (RSI) stands at 66, signaling a bullish sentiment that is not yet in the overbought territory. The MACD, at 5.231, trails its signal line at 8.80, indicating a potential slowdown in upward momentum.

Gold's price hovers above the 50-Day Exponential Moving Average (EMA) of $2,028, underlining a short-term bullish trend. However, the formation of a triple top pattern around the $2,036 mark suggests a formidable resistance. A breakout above this level could pave the way for further ascents, while failure to breach could lead to a reversal.

The overall trend for Gold appears to be bearish below the $2,036 threshold. In the short term, the market is likely to test the resistance levels in the coming days, keeping investors and traders alert to the possibility of both bullish continuations and bearish reversals.

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