Technical Analysis

GOLD Price Analysis – Nov 03, 2023

By LonghornFX Technical Analysis
Nov 3, 20234 min

Daily Price Outlook

Despite the risk-on sentiment in the market, the price of Gold (XAU/USD) has continued to rise for the second consecutive day on Friday. However, this upward trend can be attributed to the ongoing unrest in the Middle East and concerns about a potential slowdown in the Chinese economy, which are further bolstering the demand for XAU/USD. However, it's important to note that the positive sentiment in equity markets was seen as a key factor that cap further gains in the price of gold.

Moreover, the growing belief that the Federal Reserve is expected to stop its policy-tightening measures and may start rate cuts in June 2024 has led to a further decrease in US Treasury bond yields. Consequently, this ongoing development continues to exert downward pressure on the US Dollar and offers continued support to the non-yielding Gold price.

Moving ahead, investors seem hesitant to place strong position and are willing to remain on the sidelines in anticipation of the US monthly jobs report. This report is expected to offer insights into the Federal Reserve's potential rate-hike trajectory and could serve as a catalyst for fresh direction in XAU/USD.

Gold Price Uncertainty Amidst Fed Rate Hike Speculation and Economic Data

Gold price has remained in a narrow trading range for the past three days, awaiting a catalyst to determine its next direction. However, there is a belief that the Federal Reserve will not raise interest rates further, leading to a drop in US Treasury bond yields and a weaker US Dollar. Nevertheless, the US economy's resilience and persistent inflation may still allow for one more Fed rate hike, possibly in December 2023 or January 2024.

Fed Chair Jerome Powell has suggested that a slowdown in the job market might be necessary to ease inflation. Consequently, the upcoming US monthly jobs report could significantly influence the Fed's decision. It is worth noting that the market analysts predict an addition of around 180,000 jobs in October, a drop from the 336,000 jobs added in the prior month, with the jobless rate expected to hold steady at 3.8%.

Hence, the Gold price remains uncertain as expectations of a potential delay in further rate hikes by the Federal Reserve could support Gold, but robust economic data may limit its gains.

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

GOLD (XAU/USD) - Technical Analysis

In the midst of fluctuating market conditions, gold has demonstrated an impressive resilience, with its current price hovering at $1986.15, marking a modest 0.04% increment within the last 24 hours. The precious metal's enduring allure is evident in its steady trajectory on the 4-hour chart, further substantiated by key technical indicators and patterns that paint a picture of its future movements.

Gold finds itself at a critical juncture, with a pivot point established at $1,990. Immediate resistance levels lie waiting at $2,026, followed by further hurdles at $2,047 and $2,082. On the flip side, support levels are firmly placed at $1,969, with subsequent cushions at $1,934 and $1,914, which could serve as potential fallbacks in case of a retracement.

The Relative Strength Index (RSI), currently at 52, signals a slight inclination towards bullish sentiment, as it remains above the midline of 50. This positions gold in a cautiously optimistic light, suggesting a potential for upward movement without straying into overbought territory.

Meanwhile, the 50-Day Exponential Moving Average (EMA) stands at $1,980, with the current price floating above this marker. This alignment typically indicates a short-term bullish trend, reinforcing the positive sentiment echoed by the RSI.

In summary, the overall trend for gold appears bullish, particularly if prices sustain above the $1980 threshold. Should this bullish momentum persist, we anticipate the precious metal to challenge the immediate resistance at $2,026 in the upcoming sessions. Investors and traders alike should keep a watchful eye on these critical levels and indicators, as they navigate the gilded paths of the gold market.

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