GOLD Price Analysis – Jan 03, 2024
Daily Price Outlook
Gold price (XAU/USD) has maintained its upward trend and garnered further bids around the 2,060 level. The reasons for this upward rally can be attributed to a combination of factors, including bets on a Fed rate cut, geopolitical risks, and China's economic woes. It should be noted that expectations of the Federal Reserve (Fed) easing its monetary policy this year, coupled with concerns about the sluggish economic recovery in China and geopolitical risks, continue to provide support to the precious metal. In addition to this, mixed US Dollar (USD) price action and the risk-off market mood have played a major role in bolstering the safe-haven gold price.
Moving ahead, traders appear hesitant to take strong positions ahead of the FOMC meeting minutes, which could provide insights into the Fed's future moves and impact the demand for the US dollar. Meanwhile, short-term trading opportunities will be influenced by US economic data, specifically the ISM Manufacturing PMI and JOLTS Job Openings.
Geopolitical Tensions and China's Economic Woes Drive Demand for Safe-Haven Assets, Bolstering Gold Prices
It's worth noting that the possibility of increased tension in the Red Sea and China's economic troubles is supporting the demand for safe-haven assets, like gold. China's official PMI released recently signals a continued decline in manufacturing with no signs of improvement at the end of 2023. While a private survey shows a faster expansion in China's factory activity in December, the overall business confidence for 2024 remains low.
Therefore, the heightened tension in the Red Sea and China's economic challenges are boosting demand for safe-haven assets, contributing to a positive impact on the gold price.
US Dollar Strength, Fueled by Surging Bond Yields, Restrains Commodities Including Gold
On the other side, the US Dollar is gaining strength, thanks to a significant increase in bond yields. This strength is putting a lid on the upward movement of commodities, including gold. The US Dollar is holding onto the gains it made overnight, reaching a high not seen in more than a week.
GOLD (XAU/USD) - Technical Analysis
Gold's technical outlook on January 3 suggests a cautious market posture. Currently trading at $2,064.55, the precious metal has seen a marginal increase of 0.02%. The 4-hour chart indicates pivotal resistance and support levels. Resistance is eyed at $2,078, $2,088, and $2,106, while support lies at $2,045, $2,029, and $2,017.
The Relative Strength Index (RSI) hovers around 49, signaling a neutral stance, neither overbought nor oversold. Additionally, Gold's proximity to its 50-Day Exponential Moving Average (EMA) of $2,059 suggests a balanced trend. Investors might consider a buy limit at $2,058, targeting $2,078, with a stop loss at $2,047.
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