GOLD Price Analysis – Nov 18, 2024
Daily Price Outlook
Gold prices gained on Monday, recovering from six consecutive sessions of losses, as the U.S. dollar held steady after last week’s sharp rally. The dollar index, which surged 1.6% last week to touch a one-year high, remained flat on Monday, providing some relief for bullion.
Dollar Softens, Supporting Gold Demand
A softer dollar typically bolsters gold by making it less expensive for foreign buyers holding other currencies. "The recent correction in gold prices is closely tied to dollar strength," noted Ross Norman, an independent market analyst. "While we may not have found a solid physical floor yet, opportunistic buying has started to support the market."
The dollar’s performance remains a key variable as investors await further signals from the Federal Reserve. This week, at least seven Fed officials are scheduled to speak, potentially offering more clarity on the central bank's interest rate trajectory.
Fed Signals and Interest Rate Impact
Recent U.S. economic data, including stronger-than-expected retail sales and sticky inflation, have tempered expectations for a December rate cut. Elevated interest rates diminish gold’s appeal, as the metal offers no yield.
"As we approach year-end, we can expect volatility in gold prices driven by profit-taking and portfolio adjustments, regardless of the Fed's actions," Norman added.
Michael Langford, chief investment officer at Scorpion Minerals, noted that near-term risks for gold are tied to further dollar strength. "While the strengthening USD is negative for gold in the short term, the long-term impact of inflationary policies will eventually support higher prices," Langford explained.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,583.78, up 0.80% on the day, as it hovers just above key support levels. The metal's immediate pivot point sits at $2,597.39, a critical level that traders will watch closely as it determines near-term direction.
A break above this pivot could signal a move toward immediate resistance at $2,618.54, with additional bullish targets at $2,644.07. On the downside, immediate support lies at $2,580.92, while further declines could expose gold to $2,537.16 and $2,516.86.
The 50-day Exponential Moving Average (EMA) at $2,581.13 offers a strong short-term support zone, aligning closely with current price action. Gold’s Relative Strength Index (RSI) is at 54, indicating a neutral stance with neither overbought nor oversold conditions. This balanced momentum highlights the potential for volatility, as any breach of key levels could trigger significant price movement.
On the 4-hour chart, the price action is consolidating between the pivot point and $2,580.92, forming a narrow trading range. The broader trend remains cautious, as gold’s upside potential faces resistance from higher Treasury yields and a firm U.S. dollar.
However, if gold successfully breaks above $2,597.39, bullish momentum may accelerate, potentially reaching $2,618.54.
Traders considering a buy-limit order at $2,580 could aim for a take-profit target of $2,616, with a stop-loss set at $2,550 to manage risk. Gold's trajectory remains tethered to macroeconomic factors, with U.S. economic data and Federal Reserve signals likely to provide further clarity on price direction.
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