GOLD Price Analysis – Jan 24, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to extend its previous day gaining streak and turned bearish around 2,028 level. However, the reason for its downward trend can be attributed to the lowered bets for an early interest rate cut by the Federal Reserve (Fed), which put some bearish pressure on the gold price. In contrast to this, the ongoing geopolitical risks and the uncertain global economic outlook was seen as a key factor that help gold price to limit its losses.
Moving on, traders seem hesitate to place strong bets as they are awaiting for more cues about the timing of when the Federal Reserve (Fed) will start cutting interest rates. Hence, the traders eyes will be on this week's important US macro releases, beginning with the flash PMIs later today. The focus will then shift to the Advance Q4 GDP print on Thursday and the Core PCE Price Index on Friday. These releases are expected to significantly impact market dynamics, making them crucial points of analysis for traders.
Fed's Rate Cut Expectations Shift to May, Impacting Gold Prices
It's worth noting that market expectations for the Fed's first interest rate cut have shifted from March to May, which has been impacting the Gold price. However, this change is due to positive US economic data, giving the Federal Reserve room to maintain higher interest rates for a bit longer.
Despite a pullback in US Treasury bond yields, the US Dollar remains strong, which was seen as another key factor that putting pressure on Gold. Notably, the current market outlook suggests a delayed rate cut in May, as opposed to the earlier expectation for March.
Therefore, the shift in Fed's rate cut expectations from March to May, influenced by positive US economic data, has pressured Gold. However, geopolitical risks and economic uncertainty are expected to limit golds deeper losses.
Gold Prices React to US Military Strikes and Economic Data Anticipation
Furthermore, US military strikes on Iranian-affiliated groups in Iraq raise tensions, increasing the risk of further Middle East escalation. As we mentioned above, traders feel cautious about global uncertainties and ongoing conflicts, await key US economic data this week. This includes flash PMIs, Q4 GDP, and Core PCE, crucial for shaping Fed policy expectations. Such economic indicators will influence USD demand and determine the near-term direction for safe-haven XAU/USD.
Hence, the US military strikes in Iraq raise tension, posing a risk of further Middle East escalation. Despite this, cautious traders await key US economic data, which will influence gold prices amid ongoing global uncertainties.
GOLD (XAU/USD) - Technical Analysis
On January 24, gold's pricing maneuvers reveal a slight retreat, with the precious metal trading at $2025.01, marking a 0.23% decline. This subtle downtick aligns with a broader hesitation seen across commodities. Gold is currently wrestling with its pivot point set firmly at $2,001, which serves as a tentative fulcrum for any directional moves.
Overhead, the immediate resistance level stands at $2,031, with further ceilings awaiting at $2,058 and $2,088. These levels are crucial for gold to breach if it is to sustain a bullish stance. Conversely, the supports form a safety net at $1,972, $1,945, and closely watched $1,916, guarding against deeper price dips.
The Relative Strength Index (RSI) hovers around the neutral 49 mark, suggesting an equilibrium between buying and selling pressures. The MACD indicator exhibits a minor divergence of -0.093 below the signal line, implying potential downward momentum. Moreover, the proximity of the current price to the 50-Day Exponential Moving Average (EMA) of $2,026 could signal a pivotal phase for the metal.
In summary, while the current trend exhibits a neutral to slightly bearish bias, strategic entry points are advised for bullish traders above $2,022, with a take-profit target at $2,038 and a stop-loss consideration around $2,012. The forecast anticipates gold to possibly challenge the resistance at $2,031 in the short term, with market participants watching for a conclusive break to validate the next trend.
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