GOLD Price Analysis – Dec 16, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward momentum, holding steady around the 2,653 mark and reaching an intra-day high of 2,655.
The primary driver behind this rise was the weaker US dollar, which lost its gains as the Federal Reserve is expected to announce a 25 basis point rate cut in its final monetary policy meeting of 2024. This led to a lower US dollar, supporting gold prices.
Furthermore, China’s disappointing retail sales data and its focus on fiscal stimulus heightened global economic uncertainty, boosting gold’s appeal as a safe-haven asset.
In the meantime, the ongoing trade tensions with the US and geopolitical uncertainties, including concerns over US President-elect Donald Trump’s policies, further supported the price of gold. Traders are now eyeing the release of the flash global PMIs for potential short-term opportunities.
Gold Price Boosted by Global Economic Uncertainty and Weaker US Dollar
On the China front, November retail sales rose by 3.0% year-over-year, falling short of the expected 4.6% and the previous 4.8%.
However, industrial production grew by 5.4%, surpassing the forecast of 5.3%. With the economy facing challenges, China’s leadership, led by President Xi Jinping, has pledged to raise the fiscal deficit target next year and shift focus towards boosting consumption.
The uncertainty surrounding China’s fiscal support has contributed to increased global economic uncertainty, which in turn has boosted the appeal of gold as a safe-haven asset.
Additionally, growing trade tensions between China and the US, including retaliation against US sanctions, has driven further demand for gold as a hedge against geopolitical risks.
On the other hand, the US dollar has weakened ahead of the Federal Reserve’s (Fed) interest rate decision.
The Fed is widely expected to cut rates by 25 basis points in its final meeting of 2024, and markets have nearly fully priced in this reduction. Thus, the weaker dollar typically supports higher gold prices.
On the data front, the Producer Price Index (PPI) rose by 0.4% month-over-month in November, signaling potential inflation pressures.
Despite this, the market still expects the Federal Reserve to lower interest rates, which supports the upward movement of gold prices. Gold tends to benefit from rate cuts because lower interest rates make gold more attractive compared to other investments.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,654.78, marking a modest gain of 0.23% in today’s session as buyers maintain control above the pivot point of $2,643.92. This upward movement reflects continued demand for the safe-haven asset amid cautious market sentiment.
Immediate resistance stands at $2,669.67, with further targets at $2,692.74 and $2,707.78. A decisive break above $2,669.67 could accelerate bullish momentum, driving gold prices toward the next critical levels.
On the downside, support is seen at $2,627.76, followed by stronger cushions at $2,613.84 and $2,598.13. Traders should monitor these levels closely, as a breach below $2,643.92 could trigger selling pressure, leading to a test of lower supports.
Technically, the 50 EMA at $2,685.75 acts as a significant barrier for further gains, suggesting near-term overhead resistance.
Meanwhile, the Relative Strength Index (RSI) at 30 indicates oversold conditions, which may support a short-term recovery if buyers step in around key levels.
The overall trend remains cautiously bullish as long as gold sustains above the $2,643.92 pivot. A buy entry above this level with a target at $2,668 and a stop loss at $2,633 aligns with the prevailing market structure. However, any break below immediate support could invalidate the bullish bias.
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