GOLD Price Analysis – Feb 07, 2024
Daily Price Outlook
Despite the US dollar bearish bias, the price of gold (XAU/USD) remained on a downward track, hovering around the $2,033 mark. However, this bearish trend in the gold price was driven by positive market sentiment, which was boosted by strong US economic indicators and hawkish comments from several FOMC members, including Fed Chair Jerome Powell. Consequently, investors adjusted their expectations for potential rate cuts in 2024. However, despite these developments, the US dollar continued to weaken as it showed signs of weakness after pulling back from a nearly three-month high, with declining US bond yields contributing to its downward pressure.
Impact of Fed Interest Rate Decisions on Gold Prices
Moving ahead, traders are currently adopting a cautious approach, preferring to wait and observe the Federal Reserve's stance on interest rates. This cautious sentiment is keeping the gold price lower. Despite the apparent strength of the US economy, particularly highlighted by the recent positive job figures, there is uncertainty regarding the Fed's future interest rate decisions. The cautious approach suggests that significant rate cuts won't happen quickly, primarily due to concerns about persistently high inflation. Consequently, the yield on US government bonds is edging towards 4.0%, which is contributing to a weaker dollar.
Impact of Economic Slowdown in China and Middle East Tensions on Gold Prices
Despite concerns about an economic slowdown in China and ongoing military actions in the Middle East, gold prices are finding support as safe-haven assets. However, the United States continued operations against Houthi rebels in Yemen and its plans for strikes on Iran-backed groups are heightening tensions in the region, further helping gold price to limit its losses. This is because the fear of further escalation in the Middle East, combined with China's economic worries, is prompting investors to seek refuge in gold.
Therefore, the news of economic slowdown in China and ongoing military tensions in the Middle East boosts demand for Gold as a safe-haven asset amid global instability, lifting its price.
GOLD (XAU/USD) - Technical Analysis
Gold remains subdued in today’s session, recording a minor decline to $2034.40, down by 0.07%. The precious metal hovers near a pivot point of $2,017.23, facing immediate resistance levels at $2,042.32, $2,065.40, and $2,086.48. These thresholds will challenge any bullish attempts. On the downside, supports are established at $1,995.15, followed by $1,972.07 and $1,944.97, crucial for preventing further dips.
The Relative Strength Index (RSI) reads at a neutral 50, suggesting a market in balance, while the MACD exhibits a value of 0.57 against a signal of -1.087, hinting at a latent bullish undertone. The 50-day EMA at $2,032.56 closely aligns with the pivot, indicating a potential inflection point for price direction.
Concluding, today’s gold market presents a tactical opportunity, recommending a sell limit at 2033, targeting profits at 2014, with a stop loss set at 2045, navigating through a market that treads cautiously.
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