GOLD Price Analysis – Nov 07, 2024
Daily Price Outlook
Gold (XAU/USD) was able to stop its downward trend and turned bullish around the $2,666 on Thursday, after a sharp 3% drop following Donald Trump's victory in the U.S. presidential election.
The drop was mainly due to a stronger U.S. Dollar (USD), as Trump’s pro-tariff policies were seen as good for the Dollar. Since gold is priced in USD, a stronger Dollar usually lowers gold prices.
Investors also moved toward riskier assets like Bitcoin (BTC), which hit new highs due to expectations of Trump easing crypto regulations. Moreover, the stock markets rose on hopes for tax cuts and fewer regulations, reducing demand for gold.
Investors are starting to return to gold as a hedge against uncertainty, especially as concerns about inflation and economic instability remain. Besides this, the U.S. Dollar’s strength has shown signs of weakening, which has helped lift gold prices.
In the meantime, the ongoing geopolitical tensions and economic concerns, particularly around trade wars and global unrest, continue to support gold’s role as a safe-haven asset. As a result, gold has regained some of its appeal, attracting buyers looking for stability amid market volatility.
Gold Under Pressure as Investors Shift to Riskier Assets Amid Strong Dollar and Economic Uncertainty
On the US front, the broad-based US dollar (USD) remains relatively strong despite expectations that the Federal Reserve will lower interest rates by 25 basis points at its November meeting.
Normally, a Fed rate cut would weaken the USD by making it less attractive to investors, but strong economic data, like the recent rise in the ISM Services PMI to 56.0, has shown resilience in the US economy. This has helped support the dollar even amid anticipated rate cuts.
On the data front, the US economy showed mixed signals in October, with the ISM Services Purchasing Managers' Index (PMI) rising to 56.0, above expectations, signaling growth in the services sector.
However, the S&P Global Services PMI slightly missed expectations at 55.0, suggesting some slowing growth. These mixed economic data added to market uncertainty, which could support gold as a safe-haven asset.
Meanwhile, Trump’s presidential win and Republican control of both the Senate and potentially Congress have raised expectations of tax cuts and a more relaxed regulatory environment, pushing investors toward riskier assets like Bitcoin (BTC) and stocks. These moves away from gold led to outflows from the precious metal, as investors adjusted their portfolios.
Gold has faced downward pressure as investors shift toward riskier assets like Bitcoin and stocks, driven by optimism around Trump’s win and potential tax cuts. However, economic uncertainty and mixed data could still support gold’s safe-haven appeal.
GOLD (XAU/USD) – Technical Analysis
Gold prices have continued their recent descent, trading at $2,655 as of Thursday, pressured by dollar strength and shifting risk sentiment in global markets. Currently, gold is hovering above a critical support pivot at $2,644. Holding this level is essential for bulls aiming to stabilize the metal.
On the upside, immediate resistance stands at $2,670, followed by the $2,690 mark, with a more robust cap at $2,708. A break above these resistance points would be necessary to trigger any sustained bullish reversal, especially with the 50-day Exponential Moving Average (EMA) positioned significantly higher at $2,741, underscoring the current bearish trend.
If gold fails to maintain support at $2,644, traders may see increased selling pressure, with support levels potentially coming into play at $2,626 and $2,605. An extended decline could push prices toward the $2,585 zone, which would be critical for assessing whether this downtrend has more room to run.
The Relative Strength Index (RSI) sits at a low 22, firmly indicating oversold conditions and suggesting that a short-term bounce may be on the horizon. However, the overall technical landscape remains bearish, and gold's path forward is likely to depend on whether it can break above $2,670 or if support at $2,644 gives way to further downside.
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