Technical Analysis

GOLD Price Analysis – Nov 09, 2023

By LonghornFX Technical Analysis
Nov 9, 20234 min

Daily Price Outlook

Gold (XAU/USD) price has failed to stop its downward trend and dropped near its lowest level since October 19. However, this bearish trend can be attributed to the mixed signals coming from specific Federal Reserve officials regarding potential future interest rate hikes. These uncertainties have significantly impacted the gold price, causing it to weaken.

In the meantime, investors seems less concerned about the Israel-Hamas conflict escalating further. This eased concern is leading to lower demand for gold as a safe-haven asset. Simply, gold is struggling to increase in value because people are uncertain about interest rates and, as a result, they feel more secure investing in other options due to decreased worries about geopolitical tensions.

Gold Prices Find Support Amid Expectations of Rate Policy Shift and Market Cautiousness

At the same time, the downward pressure on gold prices is moderately easing, as more people are starting to believe that the US central bank is nearing the end of its plan to raise interest rates. This belief is causing US Treasury bond yields to decline and weakening the position of the US Dollar. Furthermore, the overall cautious sentiment in the financial markets and concerns about China's economic situation are also providing support to the value of gold and stopping it from experiencing further declines.

Gold Price Stability Amid Dollar Weakness and Low Bond Yields

It's important to highlight that the price of gold remains relatively low during the European session on Thursday. Nevertheless, it's not declining significantly further, thanks to a modest weakening of the US Dollar. Notably, the yield on the 10-year US government bond, a significant indicator, is staying at a low level, which is unfavorable for the US Dollar. Hence, this situation is playing a role in stopping gold from experiencing notable losses.

China's Economic Challenges and Gold Price Support

Moreover, the latest inflation data from China indicates continued downward pressure on prices due to the nation's slowing economy. The National Bureau of Statistics reported that China's Consumer Price Index (CPI) declined by 0.1% in October, marking a departure from the 0.2% increase recorded the previous month. On an annual basis, the CPI experienced a decrease of 0.2%.

Furthermore, China's Producer Price Index (PPI) extended its downward trajectory for the 13th consecutive month, with a 2.6% decline in October. This decline was slightly more significant than the 2.5% drop previously reported but better than the anticipated 2.8% decrease. These numbers signal an ongoing pattern of decreasing prices for both consumers and producers in China.

Therefore, the reports indicating China's continued deflationary pressures and economic difficulties might contribute to some support for the price of gold.

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

GOLD (XAU/USD) - Technical Analysis

In today’s technical analysis, gold's trading activity reflects a subtle balance between bearish sentiment and potential bullish catalysts. Currently priced at $1,948.74, gold has registered a minor decline of 0.03% over the past 24 hours. The 4-hour chart suggests a consolidative phase as the precious metal navigates between its pivot point at $1,933.82 and immediate resistance at $1,971.76.

Looking closer at the key price levels, gold’s immediate support lies at $1,934.09, a breach of which could open the path to subsequent support levels at $1,917.03 and $1,951.86. Resistance levels to watch include $1,971.76 followed by $1,989.53 and $2,010.86. These thresholds will serve as the battlegrounds for bulls and bears in the sessions to come.

The Relative Strength Index (RSI) stands at 28, indicating an oversold market condition. This suggests that we may witness a short-term reversal as traders could interpret this as a buying opportunity. The Moving Average Convergence Divergence (MACD) exhibits a bearish trend with the MACD line residing below the signal line. This could indicate that despite the oversold condition, the market sentiment remains cautious.

The 50-day Exponential Moving Average (EMA) at $1,973.84 serves as a critical juncture. With the price currently below the 50 EMA, the short-term trend skews bearish. However, a sustained move above this level could signal the onset of bullish momentum.

As for chart patterns, careful analysis is required to discern the prevailing pattern at this juncture, along with any candlestick formations that could provide further insight into market sentiment and potential price direction.

Overall, the trend for gold appears neutral with a bullish inclination above the $1,973.84 threshold. The confluence of technical indicators and chart patterns suggests that the market is currently contemplating its next significant move. Traders should monitor these levels closely, as a break above the 50 EMA could invite further bullish activity, whereas a continued hold below could affirm the bearish pressure.

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