GOLD Price Analysis – Nov 11, 2024
Daily Price Outlook
Gold prices (XAU/USD) started the new week with bearish bias and edged lower around below $2,670 level. However, the reason for its downward rally can be associated with the strong US dollar, which has been rising and is near a four-month high. This strength comes from growing optimism about President-elect Donald Trump’s plans, especially his promise to reduce corporate taxes.
As investors become more confident, the market sentiment has improved, leading to a stronger dollar. This shift has put downward pressure on gold prices. The stronger dollar makes gold more expensive for foreign buyers, reducing demand and contributing to the decline in gold's value.
Looking forward, traders will keep their eyes on key events this week, including the release of US inflation data, the Producer Price Index, and Retail Sales figures. They’ll also watch for comments from Fed officials, especially Jerome Powell, for clues on rate cuts, which could impact the USD and commodity prices.
Impact of US Dollar Strength and Trump’s Economic Plans on Gold Prices
Despite expectations that the Federal Reserve might cut interest rates further, the US dollar is staying strong, near a four-month high. This strength is mainly driven by President-elect Trump’s promise to lower corporate taxes, which has boosted market confidence. As a result, investors are pulling away from safe-haven assets like gold.
While Trump's policies are expected to support economic growth and inflation, keeping US Treasury bond yields high, the possibility of rate cuts from the Fed could offer some support for gold. This creates a mixed outlook for gold, with both positive and negative factors influencing its price.
On the US economic front, the Federal Reserve recently cut its key interest rate by 25 basis points and hinted that more cuts might come. However, Fed officials, like Minneapolis Fed President Neel Kashkari, have said they want more proof that inflation is on track to hit the 2% target before cutting rates further.
As a result, the yellow-metal experienced its biggest weekly drop in over five months as the US dollar strengthened and Treasury bond yields rose after Trump’s election victory.
However, the optimism surrounding Trump’s economic plans, known as the 'Trump trade,' continues to boost the dollar and pressure gold prices. Trump’s protectionist policies could also raise global trade tensions, possibly pushing investors back to gold as a safe-haven asset.
Thus, the strength of the US dollar and rising Treasury yields, fueled by Trump’s economic plans, have pressured gold prices, leading to its biggest weekly drop in five months. Although, the possible global trade tensions could drive investors back to gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold prices continue to face pressure, currently trading at $2,671.65, down 0.48% for the day. The metal is struggling to break through resistance levels as bearish sentiment prevails. The immediate pivot point lies at $2,682.99, providing a critical reference for short-term movement.
Gold’s immediate resistance stands at $2,697.76, followed by $2,710.07, with further resistance at $2,725.76. A failure to breach these levels would reinforce the selling momentum, potentially pushing prices toward the immediate support level of $2,666.69. Below this, additional support is seen at $2,654.69 and $2,643.30.
Technical indicators suggest a weak outlook for gold. The Relative Strength Index (RSI) is currently at 36, indicating that gold is approaching oversold territory, yet there’s limited buying interest at this stage. The 50-day Exponential Moving Average (EMA) at $2,683.79 acts as a resistance barrier. As long as gold remains below this moving average, the bearish bias remains intact.
In light of these technical factors, a potential short entry is recommended below $2,707, with a target of $2,673 for take-profit and a stop-loss set at $2,726 to manage risk. Traders should monitor the pivot point closely, as any sustained move above $2,683.79 could alter the bearish outlook, albeit temporarily.
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