Technical Analysis

GOLD Price Analysis – March 19, 2024

By LonghornFX Technical Analysis
Mar 19, 20243 min

Daily Price Outlook

Gold price has been facing downward pressure and maintaining a bearish trajectory near the 2,150 level over the past four days. This decline is attributed to the hawkish feds outlook mainly because investors believe the Federal Reserve will keep interest rates high, making the US dollar stronger. However, the recent release of robust inflation data has reinforced this expectation, strengthening the conviction that the Fed will maintain its current monetary policy stance.

Moreover, the geopolitical tensions such as the ongoing Russia-Ukraine conflict and disturbances in the Middle East have emerged as potential catalysts for supporting gold prices. Investors often turn to gold as a safe-haven asset during periods of heightened uncertainty.

Impact of US Economic Indicators on Gold and the Dollar

On the US front, the recent rise in inflation in the US suggests that the Federal Reserve might keep interest rates high for longer. This makes the US dollar stronger but lowers the price of gold. Investors are expecting fewer interest rate cuts from the Federal Reserve this year, with a 51% chance of a rate cut in June. Thereby, the lower interest rates usually make a currency less appealing to investors, which could limit gains for the US dollar. On the flip side, this could help gold prices because they often rise when the dollar weakens.

Geopolitical Conflicts and Their Impact on Gold Prices

On the geopolitical front, the ongoing conflicts like the Russia-Ukraine war and Middle East disputes make investors worried, so they invest in safe options like gold, increasing its demand and price. This uncertainty can also cause shifts in other financial markets, further boosting gold prices. Ukraine increased drone attacks on Russian oil refineries, and Israeli Prime Minister Benjamin Netanyahu announced intentions to enter Gaza's Rafah area. These actions add to global uncertainty, affecting oil markets and regional stability.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold's price experienced a marginal decrease, trading at $2158.57, down by 0.01%. The precious metal is hovering around pivotal levels as traders and investors gauge market directions amidst fluctuating global economic cues. With a current pivot point at $2163, gold faces immediate resistance at $2169, followed by higher resistance levels at $2176 and $2184. On the downside, support is found at $2153, with further cushions at $2147 and $2139, indicating potential floors for price retracements.

The RSI indicator stands at 47, suggesting a neutral to slightly bearish sentiment among market participants. The 50-day Exponential Moving Average (EMA), positioned at $2153, is closely aligned with the current price, offering a potential support zone that could influence short-term price movements.

A downward trendline extending resistance near the $2160 level hints at a bearish bias below this mark. Investors might consider this a cue for potential sell trades, should the price fail to breach the $2162 resistance. Given the current technical setup, a cautious approach is advised, with a recommended entry price for selling below $2162, targeting a take profit at $2152, and setting a stop loss at $2168. This cautious stance reflects the market's ongoing evaluation of gold's value as it navigates through various economic indicators and geopolitical developments.

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