Technical Analysis

GOLD Price Analysis – Nov 23, 2023

By LonghornFX Technical Analysis
Nov 23, 20233 min

Daily Price Outlook

Gold prices (XAU/USD) managed to stop their previous day's decline and experienced a rebound during the early European session on Thursday. However, the upward movement is mainly attributed to a weakening US dollar, fueled by growing expectations that interest rates in the US have reached their peak. This sentiment is further supported by a recent decline in US Treasury bond yields, exerting downward pressure on the Greenback and contributing to the gains in the non-yielding precious metal, gold.

Gold Prices Surge Amid Dovish Fed and Economic Uncertainty

As mentioned earlier, gold has been gaining momentum and the reason could be tied to the renewed selling pressure on the US dollar. However, the recent surge in the dollar was fueled by optimistic minutes from the Federal Reserve's meeting, which appeared to be losing steam. Meanwhile, the sentiment that the Fed may not pursue additional interest rate hikes is gaining traction. The central bank seems inclined to sustain higher rates over an extended period, showing a readiness to implement more tighten policies if inflation management becomes a concern. Hence, this sentiment is seen as a key factor supporting the upward movement in gold prices.

Despite the positive data on the US labor market and consumer sentiment, the focus remains on the Federal Reserve's dovish outlook. Market indicators are pointing towards a 50% chance of the US central bank cutting interest rates by May 2024. Notably, unemployment claims exceeded expectations by dropping to a monthly low of 209K. However, consumer sentiment indicates an increase in inflation expectations for the second consecutive month. Furthermore, recent US data unveils a more significant-than-expected decline in orders for durable goods in October, pointing towards a deceleration in economic demand.

Therefore, the dovish Federal Reserve outlook, coupled with positive US data, has increased uncertainty, potentially leading to upward pressure on gold prices as investors seek a hedge against economic uncertainties and potential interest rate cuts.

Looking ahead, investor activity is subdued on the day with lighter trading volumes due to the US Thanksgiving holiday.

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

GOLD (XAU/USD) - Technical Analysis

Gold, a traditional safe-haven asset, is currently trading at $1996, marking a slight increase of 0.29%. The pivot point for gold stands at $2005 , suggesting a delicate balance in the market.

Resistance levels are identified at $2028, $2067, and $2103, indicating potential ceilings in price movement. Conversely, support levels are found at $1970, $1943, and $1908, providing potential floors for price dips.

The Relative Strength Index (RSI) is at 58, hovering near the midpoint of the 0-100 scale, suggesting a neutral market sentiment without clear overbought or oversold signals. The Moving Average Convergence Divergence (MACD) shows a value of -0.866, with the signal at 5.824, indicating a potential bearish divergence.

The 50-Day Exponential Moving Average (EMA) is at $1994, closely aligning with the current price, suggesting a stable short-term trend.

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