Technical Analysis

GOLD Price Analysis – Jan 02, 2024

By LonghornFX Technical Analysis
Jan 2, 20243 min

Daily Price Outlook

Gold price (XAU/USD) maintained its upward trend and started the new year on a positive note around the 2,075 level. However, the reason for its upward trend could be attributed to the growing acceptance that the Federal Reserve (Fed) will soon start cutting interest rates, as early as March, along with geopolitical risks and concerns about the weak economic recovery in China.

In contrast to this, the ongoing US dollar recovery from a five-month low touched last week, bolstered by a further rise in US Treasury bond yields, might keep a lid on any further gains for the Gold price.

Moving ahead, traders appear hesitant to take strong positions as they await the FOMC minutes on Wednesday. Market participants also seem reluctant amidst relatively thin trading volumes, possibly preferring to wait for the FOMC minutes before placing directional bets. The upcoming busy US economic schedule for the beginning of the month is anticipated to bring important macro releases, which could potentially influence the precious metal.

Gold's Strong Performance in 2023 and Positive Outlook for 2024

It's important to mention that gold had a strong 13% annual increase in 2023, making it the best year since 2020. The positive trend is expected to continue, thanks to hopes that the Federal Reserve may potentially ease its policy in March. There is an 85% chance of a rate cut in March, according to CME's FedWatch tool.

Therefore, the news of a strong 13% annual increase in gold prices in 2023, coupled with the potential Federal Reserve policy easing in March, may further boost gold prices, driven by increased investor confidence.

Apart from this, gold is also gaining support as a safe haven due to geopolitical tensions in Ukraine, the Middle East, and China's economic challenges. In the meantime, the recent US actions against the Iran-backed Houthi group and China's struggling manufacturing sector enhance the metal's appeal. Investors are monitoring key events, including the FOMC minutes, NFP report, and other economic releases this week.

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

GOLD (XAU/USD) - Technical Analysis

Gold exhibits a promising trend at the start of the year, trading at $2,069, up by 0.32%. The current movement positions the precious metal near its pivot point of $2,069. Bullish sentiments are evident, with immediate resistance levels set at $2,083, $2,103, and $2,118. Support levels are found at $2,048, $2,033, and $2,012, offering potential cushions against price drops.

The Relative Strength Index (RSI) stands at 53, indicating a slightly bullish momentum, while the Moving Average Convergence Divergence (MACD) at -2.0 lags behind its signal line at 2.6, hinting at potential bearish pressure. However, the price of gold remains above its 50-Day Exponential Moving Average (EMA) of $2,060, supporting the bullish trend. The observed double bottom pattern and the 50 EMA reinforce gold's stability around $2,060.

In conclusion, the overall trend for gold appears cautiously optimistic. Traders might consider a buy limit at 2065, aiming for a take profit at 2085, with a stop loss set at 2050, carefully observing the mentioned support and resistance levels for any shifts in the market.

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