Technical Analysis

GOLD Price Analysis – Nov 10, 2023

By LonghornFX Technical Analysis
Nov 10, 20233 min

Daily Price Outlook

Gold (XAU/USD) continued its downward trend, staying at its lowest level since October 18. However, the reason for its decline can be attributed to the bearish US dollar, driven by expectations of an additional Federal Reserve rate hike. Meanwhile, the decreasing safe-haven demand was seen as another key factor that has been undermining the gold price. Notably, the precious metal retreated to the $1,955 range during the European session and is poised to mark its most substantial weekly loss in over a month.

Federal Reserve's Cautious Approach and Its Impact on Gold

It's worth noting that key members of the Federal Reserve are leaning towards a hawkish stance to control inflation. Fed Chair Jerome Powell expressed optimism about slowing inflation but isn't convinced that current measures are enough. Thereby, this confidence boost led to a rise in the 10-year US government bond yields, supporting the US dollar and putting pressure on gold prices.

In the meantime, various Fed officials, like Raphael Bostic and Thomas Barkin, suggest the need for further tightening. Patrick Harker emphasizes the importance of keeping interest rates higher for a while, and Kathleen O'Neill Paese indicates it's premature to rule out more rate hikes.

Developments Impacting Gold and Global Sentiment

Furthermore, the worries about conflicts between Israel and Hamas are easing, which is making investors less interested in the safe-haven gold (XAU/USD). Conversely, lingering worries about China's economic challenges are providing some support to gold as a secure investment. Looking ahead, traders are keeping an eye on the Michigan US Consumer Sentiment Index, which might affect the value of the US dollar. Along with overall market feelings, this could create some short-term opportunities for trading gold.

On a different note, the White House announced that Israel intends to implement daily pauses in operations in Gaza, providing people with opportunities to escape the conflict through safe passages. Persistent concerns about China's economic challenges might lend support to the safe-haven gold, especially as traders closely monitor the US Consumer Sentiment Index.

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

GOLD (XAU/USD) - Technical Analysis

In the current technical landscape for Gold Spot against the U.S. Dollar, the market presents a cautious narrative, reflective of broader economic sentiments. As of the latest 4-hour chart, gold is trading near the $1,958.50 mark, with minor fluctuations indicating a market in search of direction. This price point serves as a pivot in the short term, with traders closely monitoring for a decisive move.

Resistance and support levels form the battleground for bulls and bears. Immediate resistance is observed at $1,963.52, a breach of which could encourage buyers to target the $1,977.79 level, followed by a psychological and technical barrier at $2,001.29. On the flip side, support levels are etched at $1,945.37 and $1,933.67, with a critical support at $1,920.12 that may hold the key to preventing further bearish momentum.

Technical indicators add layers to our understanding. The Relative Strength Index (RSI) hovers around 42.95, below the neutral 50 mark, hinting at bearish sentiment but not yet signaling an oversold condition that could prelude a trend reversal. While the exact MACD values are not discernible, the indicator's trend suggests a cautious approach; a MACD line crossing below the signal line typically flags potential downward momentum.

The chart reveals the price is trailing below the 50 EMA of $1,970.01, suggesting a short-term bearish trend. This alignment reinforces the resistance levels outlined, painting a picture of a market not yet ready to commit to a sustained upward push.

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