GOLD Price Analysis – Nov 06, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their downward trend and edging lower to the 2,728 level, hitting an intraday low of 2,701.65. However, the bearish trend can largely be attributed to the strength of the US dollar, which surged to a nearly four-month high in response to US election exit polls suggesting former President Donald Trump may be favored.
This shift in sentiment, coupled with the market's optimism surrounding a potential Republican victory in the upcoming US presidential election, contributed to further pressure on gold prices.
However, ongoing geopolitical risks, particularly the long-lasting conflicts in the Middle East, continue to provide some support to the safe-haven demand for gold. Moving ahead, traders are closely watching the Federal Reserve's interest rate decision this Thursday.
Most market participants are expecting a 25 basis point cut, with the CME FedWatch Tool showing a 96.4% probability of a quarter-point reduction. Thus, the 25 basis point rate cut by the Fed could weaken the US dollar, making gold more appealing as a safe-haven asset, potentially pushing gold prices higher.
US Dollar Strengthens Amid Trump’s Growing Election Support, Putting Pressure on Gold Prices
On the US front, the broad-based US dollar maintained its upward trend and strengthened further, largely due to increasing confidence in Donald Trump’s chances of winning the US presidential election.
The latest polls suggest a tight race between Trump and Kamala Harris, with Trump currently holding a slight edge. On platforms like Kalshi and Polymarket, Trump leads Harris by about 57% to 43% and 60.7% to 39.5%, signaling growing support for Trump as election day nears.
It should be noted that early exit polls from key states show strong support for Trump. In Wisconsin, he’s leading with 56% of the vote, while Harris has 42.5%. North Carolina is a close race, and in Michigan, Harris’ lead has dropped from 61% to 53%. Early data from Georgia also shows Trump ahead, but these numbers are based on a small portion of votes counted, so the final outcome is still uncertain.
On the data front, the US ISM Services PMI showed stronger-than-expected growth in October, which further boosted confidence in the economy and supported the US dollar. This data, along with the ongoing political uncertainty, has kept gold prices under pressure, as investors tend to favor the stronger dollar in such times.
GOLD (XAU/USD) – Technical Analysis
Gold prices continue to face downward pressure, trading around $2,725.41 after a failed attempt to break above key resistance levels. Currently, the metal is struggling below the pivotal $2,731 level, suggesting a bearish sentiment in the short term.
Sellers seem in control, with price action slipping further below the 50-day EMA at $2,745, reinforcing the downside bias. Immediate resistance now lies at $2,731, followed by the next levels at $2,747 and $2,760.
On the support side, the first level to watch is at $2,710, with further support emerging at $2,702 and $2,693. A decisive break below $2,710 could open the door for deeper declines, especially if bearish momentum accelerates.
The Relative Strength Index (RSI) stands at 35.68, showing that gold is approaching oversold territory, but not quite there yet. This indicates that while further downside is possible, some traders might begin looking for buying opportunities if the RSI dips below 30.
The recent sell-off was triggered after prices failed to sustain above the $2,731 mark, leading to increased bearish momentum in the market.
Traders are likely eyeing a sell position below $2,731, with a target price around $2,710 and a stop loss near the resistance at $2,747. A close below $2,710 would likely confirm bearish continuation and could signal a further slide toward the $2,693 support level.
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