GOLD Price Analysis – Nov 08, 2024
Daily Price Outlook
Gold prices (XAU/USD) unable to stop its downward trend and facing strong bearish pressure around 2,680 level amid several factors. Investors are feeling hopeful that former President Trump’s policies could boost economic growth and inflation, which has helped lift demand for the US Dollar, despite the Federal Reserve’s more cautious outlook. Moreover, the upbeat mood in the markets has reduced interest in safe-haven assets like gold.
Impact of Strong US Dollar and Fed Rate Cuts on Gold Prices
On the US front, the US Dollar regained its strength, largely due to expectations that Donald Trump’s policies might boost economic growth and inflation. Many investors believe that Trump’s plans could lead to higher spending and deficits, which would likely raise inflation.
This optimism about growth has overshadowed the Federal Reserve’s cautious (dovish) outlook, which normally would weaken the Dollar. This dollar strength, combined with a positive mood in the market, has put pressure on gold prices, as demand for safe-haven assets like gold tends to drop when the dollar is strong.
During his post-meeting speech, Fed Chair Jerome Powell did not indicate any pause in future rate cuts, suggesting that the central bank may continue easing to manage inflation. The market reacted quickly, with traders now seeing a 75% chance of another rate cut in December.
This has led to a decline in US Treasury bond yields, which might limit further gains in the Dollar. The prospect of Trump’s policies increasing inflation and deficits has also made it harder for the Fed to consider rate cuts down the road, adding to the Dollar’s current strength.
Therefore, the strong US Dollar and potential Fed rate cuts have pressured gold prices, as a stronger dollar reduces gold’s appeal for non-US buyers. Lower bond yields may slow this decline, but the Dollar’s gains generally decrease gold’s demand as a safe-haven.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading slightly lower at $2,694.61, down 0.45% as it hovers around crucial support levels amid renewed selling pressure. With immediate support at $2,687.30, gold remains in a tentative position. A breakdown below this level could expose gold to further downside risk, with the next key support points at $2,673.76 and $2,654.69.
Conversely, on the upside, immediate resistance is noted at $2,707.64, which aligns with recent intraday highs. Any sustained move above this level could allow for a bullish run towards the next resistance zones at $2,725.76 and $2,743.00, with a more formidable barrier at $2,758.57.
The Relative Strength Index (RSI) stands at 52, indicating neutral momentum, neither overbought nor oversold, which implies room for movement in either direction. Meanwhile, the 50 EMA, currently at $2,688.07, supports the notion of a short-term bearish trend if prices remain below this level.
Traders might consider a selling entry below $2,707.64, with a target at $2,673.76 and a stop-loss set at $2,726, as market dynamics lean toward downside risk given the subdued momentum.
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