Technical Analysis

GOLD Price Analysis – Nov 22, 2023

By LonghornFX Technical Analysis
Nov 22, 20233 min

Daily Price Outlook

Gold prices (XAU/USD) struggled to maintain their previous upward momentum and experienced a decline below the $2,000 mark during the Asian session on Wednesday. However, the downward trend in gold can be attributed to the minutes released from the Federal Reserve's latest policy meeting on October 31-November 1. These minutes revealed a hawkish tone, indicating that officials are still committed to tightening policy further if progress in controlling inflation falters.

Consequently, this development was seen as a key factor prompting investors to shift away from the non-yielding yellow metal. In the meantime, the recovering US dollar, supported by the Federal Reserve's hawkish stance, has played a major role in deteriorating the value of gold.

Federal Reserve's Stance and Market Dynamics

It's worth noting that the latest Federal Reserve meeting minutes reveal a push for keeping interest rates high to tackle inflation. However, many in the market believe the Fed will stick to steady rates and are even considering rate cuts by spring 2024.

Notably, the 10-year US Treasury bond yield is currently low, and the US Dollar is struggling to bounce back from a months-long low. In October, the National Association of Realtors reported a drop in US Existing Home Sales to the lowest level in over 13 years.

Despite this, policymakers are saying they want to be careful about raising interest rates again, suggesting that the Federal Reserve might not increase them further. Many people in the market expect that there could be rate cuts starting around the April 30-May 1 policy meeting next year. Therefore, this uncertainty has led to a slight recovery in the US Dollar, which is affecting gold prices.

Recent Middle East Developments and Market Focus

Another factor contributing to the decline in gold prices is the news that Israel and Hamas have reached an agreement to gradually release 50 hostages in Gaza. Simultaneously, Palestinian prisoners will also be released, and there will be a four-day pause in attacks. These developments have bolstered the risk-on market sentiment, impacting the safe-haven precious metal positively.

Moving ahead, traders are now turning their attention to upcoming US macroeconomic data, including Initial Weekly Jobless Claims, Durable Goods Orders, and the revised Michigan Consumer Sentiment Index, for short-term market direction.

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

GOLD (XAU/USD) - Technical Analysis

Gold's market performance on November 22 presents a nuanced picture as it trades at $1997.265, showing a marginal decline of 0.08%. The pivot point at $2,007 serves as a crucial juncture for determining future price action. Key resistance levels are observed at $2,029, $2,069, and a significant barrier at $2,104. On the downside, immediate supports are identified at $1,969, $1,944, and $1,908, which will be pivotal in curtailing any further price drop.

The Relative Strength Index (RSI) stands at 62, suggesting a modest bullish sentiment without crossing into overbought territory. The MACD, currently at 0.91 and above the signal line of 7.72, indicates a potential upward momentum. However, the presence of a triple top pattern around $2008 marks a key resistance, potentially capping the upside.

The 50-Day Exponential Moving Average (EMA) at $1,993 supports a bullish trend, as the current price hovers above this marker. This configuration indicates a potential for upward movement, provided the resistance at $2008 is decisively breached.

The overall trend for Gold appears to be cautiously bullish, particularly if it sustains above the $2008 level. However, a break below this resistance-turned-support could shift the sentiment to bearish. In the short term, Gold may test the resistance at $2,029, and its ability to break or hold below this level will be critical in determining the direction for the coming days.

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