GOLD Price Analysis – Nov 15, 2024
Daily Price Outlook
Gold prices (XAU/USD) managed to recover some ground but slipped back to around $2,555 by early European session on Friday. This bearish bias was mainly due to the strength of the US Dollar and growing uncertainty about how quickly the Federal Reserve might cut interest rates.
At the same time, expectations that inflation could rise next year—partly because of Donald Trump’s policies—have made rate cuts less likely, which has put additional pressure on gold prices.
On the geopolitical front, the long-lasting tussle in the Middle East and the ongoing Russia-Ukraine conflict could help limit gold’s losses, as investors tend to turn to it as a safe-haven asset. Looking ahead, all eyes will be on the US Retail Sales data for October, set to be released later today, along with the NY Empire State Manufacturing Index and Industrial Production numbers.
China's Economic Measures and Their Impact on Gold Market
On the other hand, China’s recent economic measures didn’t meet investor expectations, putting pressure on the gold market. The country announced a huge 10 trillion Yuan debt package to support local governments and stimulate economic growth.
However, the package lacked direct stimulus measures, which left investors hoping for more aggressive support feeling disappointed and weighed on market sentiment.
Despite this, China’s retail sales rose by 4.8% year-over-year in October, beating the expected 3.8% and last month’s 3.2% increase. This jump in consumer spending points to improving domestic demand, which could be positive for gold, as it may indicate stronger consumer confidence and higher gold consumption.
Stronger US Dollar and Persistent Inflation Concerns Could Put Pressure on Gold Prices
On the US front, the US Dollar has been gaining strength, although it recently pulled back from its yearly high of 107.06. This drop is due to a slowdown in 'Trump trades,' with the US Dollar Index (DXY) now around 106.80. Meanwhile, the US Producer Price Index (PPI) rose 2.4% in October compared to last year, beating expectations.
In the meantime, the Core PPI, excluding food and energy, climbed 3.1%, also surpassing forecasts. These numbers indicate that inflation pressures are still lingering, which could weigh on gold prices, as higher inflation often leads to higher interest rates, making gold less attractive.
Fed officials are also signaling that interest rate cuts will not be happening anytime soon. Federal Reserve Bank of St. Louis President, Alberto Musalem, noted that inflation challenges are making it difficult for the Fed to lower rates further. Meanwhile, Fed President Jeffrey Schmid warned that expectations for a return to near-zero rates are unrealistic.
Therefore, the stronger US Dollar and persistent inflation pressures, along with the Fed’s stance on rate cuts, could keep gold prices under pressure as higher inflation often leads to higher interest rates, making gold less attractive as an investment.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading around $2,561.97, down 0.11%, as it lingers below its pivot point of $2,572.70, suggesting that bearish sentiment continues to dominate. The Relative Strength Index (RSI) sits at 41, well below the neutral 50 mark, indicating weak momentum.
Immediate support lies at $2,537.16, with deeper support at $2,516.86 and $2,497.83 if sellers increase pressure. Conversely, gold faces immediate resistance at $2,595.94, aligning closely with the 50-day EMA of $2,594.24, reinforcing this level as a significant hurdle.
A break above $2,572.70 could give bulls some breathing room, possibly driving prices towards $2,595.94, but sustained upward momentum would require clearing additional resistance at $2,618.54. In the current scenario, failure to regain ground above the pivot suggests a downward bias, with a potential target near $2,537 if selling continues.
The bearish trend may remain intact as long as gold trades below the pivot, with sellers likely to enter aggressively around the $2,572 mark.
Given the overall setup, the outlook for gold remains cautious, with the primary entry strategy focused on selling below $2,572. Key levels and the RSI confirm the bearish inclination, making this a critical juncture for price movement.
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