GOLD Price Analysis – Nov 20, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue to struggle, staying weak around the $2,624 mark on Wednesday. Despite this sluggish trend, the ongoing Russia-Ukraine tensions still support gold as a safe-haven asset.
However, easing concerns about a potential nuclear war and the strong performance of the US dollar are keeping gold's gains in check.
Investors are growing more optimistic that US President-elect Donald Trump's policies will drive economic growth and inflation, making it less likely for the Federal Reserve to cut interest rates.
This has led to higher US Treasury bond yields, boosting the US dollar and putting pressure on gold. As a result, traders are staying cautious, waiting for upcoming speeches from Federal Reserve officials to get a clearer picture of future monetary policy.
Stronger US Dollar and Rising Treasury Yields Weigh on Gold's Outlook
On the US front, the dollar has been gaining strength, fueled by market expectations of potential tariffs and tax cuts under the incoming Trump administration. These measures are expected to drive up inflation, making it less likely for the Federal Reserve to cut interest rates in the future. As a result, the stronger dollar has added pressure on gold, contributing to its recent losses.
According to the CME Group's FedWatch Tool, traders now see less than a 60% chance of a 25-basis-point rate cut in December. At the same time, US Treasury yields are climbing, keeping the dollar strong and limiting gold's (XAU/USD) potential for gains.
Investors are also keeping a close eye on speeches from key FOMC members today, hoping for insights into the Fed's rate plans, which could influence gold’s next move.
Therefore, the stronger US dollar and rising Treasury yields are pressuring gold prices, limiting its upside potential. Reduced rate cut expectations and investor focus on FOMC speeches further weigh on gold, as monetary policy clarity could impact its safe-haven appeal.
Geopolitical Tensions and the Russia-Ukraine Conflict Drive Increased Demand for Gold
On the other hand, rising geopolitical tensions, particularly the worsening Russia-Ukraine conflict, are increasing gold's appeal as a safe-haven investment. Investors are concerned about the situation escalating, leading more money into gold. Recently, Russian President Vladimir Putin updated the country's nuclear policy, outlining when Russia might consider using nuclear weapons.
In response, Ukraine, with US support, launched ATACMS missiles at a Russian military site near Bryansk. Despite the escalating tensions, Russian Foreign Minister Sergei Lavrov reassured that Russia is focused on avoiding nuclear war, while the White House confirmed no changes to its own nuclear stance.
Therefore, the escalating Russia-Ukraine conflict and rising geopolitical tensions are boosting gold's appeal as a safe-haven investment. Investors, concerned about further escalation, are increasingly turning to gold, driving demand and supporting its value amid uncertainty.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) are trading at $2,629.60, down 0.09% as bearish momentum emerges below the pivot point at $2,640.77. Immediate resistance is positioned at $2,663.57, with higher barriers at $2,684.85 and $2,707.65, forming a challenging upward path.
The 50-day EMA at $2,593.63 aligns with the immediate support level of $2,612.40, providing key downside protection. Additional support levels include $2,590.11 and $2,561.23.
The Relative Strength Index (RSI) at 59 suggests neutral momentum, leaving room for further selling pressure if prices fail to reclaim $2,640.77. A break below $2,612.40 would likely intensify the downward trajectory, targeting $2,590.11.
Conversely, a sustained push above $2,663.57 could signal renewed bullish interest, but near-term sentiment leans bearish.
Traders are advised to consider selling below $2,641, targeting $2,598 with a stop loss at $2,664. With the strong US dollar and rising Treasury yields weighing on gold, the path of least resistance appears downward.
Gold is bearish below $2,641, with selling opportunities targeting $2,598. A break below $2,612.40 could accelerate losses, while resistance at $2,663.57 holds the key to any bullish recovery.
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