Technical Analysis

GOLD Price Analysis – Nov 15, 2023

By LonghornFX Technical Analysis
Nov 15, 20234 min

Daily Price Outlook

Gold prices (XAU/USD) have extended their winning streak, marking a third consecutive day of gains. Meanwhile, it reached a new weekly high around $1,971 during the early European session. However, this upward movement was driven by the selling pressure on the US Dollar. This sentiment is influenced by increasing expectations that the Federal Reserve (Fed) has completed its interest rate hikes. This change in monetary policy was seen as beneficial factor for gold, given its status as a non-yielding asset.

However, the current risk-on sentiment in the market, driven by dovish expectations from the Federal Reserve and significant liquidity injections from China's central bank, will likely curb further gains in safe-haven gold prices. Moving on, traders seems hesitant to place any strong position as indications suggest a potential easing of tensions in the Middle East.

Influence of Economic Indicators on Gold Price and Market Dynamics

On Tuesday, the US Bureau of Labor Statistics reported that the October Consumer Price Index (CPI) remained unchanged, with the yearly rate experiencing its smallest increase in two years, slowing to 3.2% from September's 3.7%. This data supports the belief that the Federal Reserve has halted its tightening policies, increasing expectations for a rate cut in May 2024.

Consequently, US Treasury bond yields dropped, with the 10-year bond hovering near a two-month low. However, the weakened US Dollar is also benefiting the non-yielding Gold price. Despite a risk-on mood, the overall outlook favors upward movement, thanks to dovish Fed expectations and a 600 billion Yuan injection by the People’s Bank of China, boosting investor confidence.

Therefore, the stable Consumer Price Index and the pause in Fed tightening have lowered US Treasury yields, keeping the US Dollar weak and supporting non-yielding gold prices.

Impact of Chinese Economic Indicators on Gold Prices and Anticipation of US Data

Moreover, China's Industrial Production showed positive growth, rising 4.6% YoY in October, beating expectations and the previous month's 4.5%. Retail Sales also exceeded predictions, up by 7.4% in the past 12 months. However, Fixed Asset Investment in China increased by 2.9% YoY, slightly lower than the expected 3.1%. These figures had a little impact on market sentiment.

Now, focus shifts to the US, expecting the October Producer Price Index (PPI) to rise by 0.1%, with a yearly rate below 2.0%. US Retail Sales are forecasted to decline by 0.3% in October, a notable drop from the previous month's 0.7% increase, while sales excluding automobiles are expected to remain flat month-on-month.

Therefore, the positive economic indicators from China may relieve some pressure on gold prices, as signs of growth could reduce the appeal of the precious metal as a safe-haven asset.

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

GOLD (XAU/USD) - Technical Analysis

In the gilded realm of commodities, gold continues to shimmer with a steady increase, evidenced by its 0.19% uptick on November 15, positioning it at 1967.535. The precious metal has been delicately threading above the pivot point of $1,960, hinting at continued investor confidence and potential for further gains.

Key resistance levels are spotted at $1,970 and $1,981, with a more formidable barrier at $1,993 that bulls may challenge should the momentum sustain. Support levels stand vigilant at $1,950, ready to uphold the price, followed by further cushions at $1,941 and $1,933, safeguarding against any downward volatility.

Technical indicators are painting a bullish picture with the Relative Strength Index (RSI) warmly situated at 63, signifying a market with robust bullish sentiment, yet not tipping into overbought territory. The Moving Average Convergence Divergence (MACD) confirms this outlook, with its value substantially above the signal line, signaling a bullish trend. Additionally, gold's current price buoyantly floats above the 50-Day Exponential Moving Average (EMA) of $1,960, underscoring the short-term bullish trend.

Chart patterns further bolster this optimistic view, with a recent breakout from a downward channel and a bullish crossover on the 50 EMA suggesting that buyers are steering the market. This technical development implies an encouraging scenario for gold, indicating a potential continuation of the buying trend.

In summary, gold's current trajectory is decidedly bullish, especially if it maintains its stance above the significant $1,960 level. Short-term forecasts suggest gold may ascend to test upper resistances soon, although investors are advised to remain vigilant for signs of reversal that could test lower supports.

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