GOLD Price Analysis – Nov 25, 2024
Daily Price Outlook
Despite the weaker US dollar, gold prices (XAU/USD) failed to gain ground and remain under pressure around the 2,660 level. However, the reason for its downward trend could be associated with several factors.
First, the recent nomination of Scott Bessent as Treasury Secretary by US President-elect Donald Trump cleared uncertainty in the markets, boosting investor confidence and contributed to the declines in the safe-haven assets.
In addition, news of a potential ceasefire between Israel and Hezbollah lifted market sentiment, driving funds away from safe-haven assets like gold. On top of that, the expectation that Trump’s policies could trigger inflation and limit the Federal Reserve's ability to cut interest rates further pressured the precious metal.
US Dollar Decline and Strong Economic Data Weigh on Gold's Prospects
Despite positive US economic data, the US dollar has been trading lower on Friday. However, the downside risks for the dollar are limited as strong US economic indicators, like the preliminary S&P Global US Purchasing Managers’ Index (PMI), have boosted expectations that the Federal Reserve might slow down its rate cuts.
As a result, traders are now pricing in a 50.9% chance of the Fed cutting rates by just a quarter point, a slight decrease from the 61.9% probability seen a week ago.
On the data front, the latest PMI data showed strong growth in the US economy. The US Composite PMI rose to 55.3 in November, marking the fastest private sector growth since April 2022.
In the meantime, the Services PMI surged to 57.0, far exceeding expectations and pointing to the strongest expansion in services since March 2022. Although the Manufacturing PMI slightly improved, it remained below 50, indicating continued contraction in the sector.
Meanwhile, Trump’s proposed policies on tariffs, immigration, and taxes are keeping Treasury yields high. These policies could lead to higher inflation, making it harder for the Federal Reserve to cut interest rates. Fed officials, like Jerome Powell, say the economy is strong and rate cuts should be careful.
Therefore, the US dollar's decline and strong economic data limit gold's potential for gains as higher Treasury yields and inflation risks from Trump's policies reduce gold's attractiveness as a safe haven. As a result, gold faces downward pressure.
Geopolitical Easing and Economic Optimism Weaken Gold's Safe-Haven Appeal
On the geopolitical front, media reports suggest that Israel and Hezbollah are close to reaching a ceasefire deal, though it hasn't been finalized yet. This news has led to reduced tensions in the region, which generally lowers the demand for safe-haven assets like gold.
Moreover, the ongoing optimism surrounding President-elect Donald Trump's potential business-friendly policies is supporting a positive outlook for equity markets. As investors feel more confident about the economy, they tend to move away from gold, which is often sought during times of uncertainty.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) have dropped 1.78%, trading at $2,668.50, as risk-on sentiment pressures the safe-haven asset. Gold is testing immediate support near $2,653.49, with stronger levels at $2,634.96 and $2,619.00 if selling momentum persists. The pivot point at $2,673.85 is acting as a key threshold for short-term price direction.
The 50 EMA at $2,683.28 currently serves as dynamic resistance, aligning with a broader bearish trend. Immediate resistance is at $2,689.52, with further hurdles at $2,705.99 and $2,720.66 if gold attempts a rebound. However, the RSI at 34 signals oversold conditions, suggesting a potential pause in bearish momentum.
A sustained break below $2,653.49 could open the door to further declines toward $2,634.96. Conversely, failure to break support may trigger a short-term bounce, targeting the $2,689.52 pivot point or higher. Traders should watch these levels closely, with $2,674 being the entry point for a sell position, targeting $2,654 with a stop loss at $2,685.
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