GOLD Price Analysis – Nov 26, 2024
Daily Price Outlook
Gold (XAU/USD) is facing some difficulty in gaining momentum and has been stuck around the $2,600 mark, hovering near its lowest point in a week during the European session on Tuesday. However, the tariff threat from US President-elect Donald Trump sparked some brief safe-haven demand, giving gold a small boost.
Despite this, concerns that the Federal Reserve might take a less dovish approach are preventing gold from making significant gains, putting a lid on its upward potential for now.
Meanwhile, the market is increasingly confident that President-elect Donald Trump’s expansionary policies could drive inflation higher, which may push the Federal Reserve to cut interest rates at a slower pace. This belief is fueling a fresh rise in US Treasury bond yields and giving the US Dollar a boost. Hence, the stronger dollar, in turn, is putting more pressure on gold prices.
Moreover, the increasing optimism around Scott Bessent’s nomination as the US Treasury Secretary and hopes for a potential ceasefire between Israel and Hezbollah are further limiting gold’s appeal as a safe-haven asset. Moving ahead, market participants are now focusing on the upcoming FOMC minutes for clues about the Federal Reserve's future rate-cut plans.
Impact of US Economic Trends and Fed Expectations on Gold Prices
The US Dollar continues to rise and stay strong, mainly because people expect President-elect Donald Trump's policies to boost inflation. This could lead the Federal Reserve to slow down its interest rate cuts. As a result, US Treasury bond yields are going up, which makes the US Dollar stronger and puts some pressure on gold prices.
However, the ongoing hopes that Scott Bessent, the possible US Treasury Secretary, will take a more gradual approach to tariffs have led to a sharp drop in US Treasury bond yields. This has temporarily weakened the USD, but the decline in bond yields remains limited due to the ongoing expectation of a less dovish Fed.
Chicago Fed President Austan Goolsbee indicated that the central bank will continue to lower rates unless there is clear evidence of an overheated economy, while Minneapolis Fed President Neel Kashkari suggested another rate cut could be considered at the December FOMC meeting.
However, traders are scaling back their bets on a 25-basis-point rate cut in December, as Trump's policies are expected to fuel inflation. This keeps US bond yields higher and helps the USD fill its weekly bearish gap, further limiting gold's upside potential.
Market participants are now looking to the FOMC minutes and upcoming economic data, including the Q3 GDP revision and the PCE Price Index, for more insights on the Fed’s future actions.
Therefore, the stronger US Dollar and rising Treasury bond yields limit gold's upside potential. As expectations of slower rate cuts and higher inflation grow, demand for gold remains subdued, keeping the precious metal under pressure in the market.
Geopolitical Tensions and Ceasefire Hopes Impact Gold Prices
On the geopolitical front, the possibility of a ceasefire between Israel and Hezbollah have put pressure on gold prices at the start of the week. However, tensions are still high in the Middle East. Israeli forces have intensified their operations in northern Gaza, and there have been ongoing strikes in Lebanon.
These actions continue to raise concerns about a further escalation in the region, which could eventually increase demand for gold if the situation worsens.
Despite the ceasefire hopes, the geopolitical risks remain, keeping the market on edge. If the conflict escalates further, it could drive more investors to seek gold as a safe haven, which may provide some support for the precious metal in the near future.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,623.21, down 0.09%, as it consolidates below the critical pivot point at $2,631.72. Technical indicators suggest that bearish momentum dominates, with immediate support at $2,605.31. A break below this level could expose gold to deeper supports at $2,582.37 and $2,561.16.
On the upside, resistance levels lie at $2,647.56, the 50-day EMA at $2,663.32, and further at $2,687.93. These levels present formidable challenges, especially as gold remains weighed down by a weaker Relative Strength Index (RSI) reading of 36, which reflects oversold conditions but insufficient buying pressure to trigger a recovery.
The bearish outlook is further supported by the alignment of the 50-day EMA as a dynamic resistance level, capping upward moves. Gold traders are focusing on the potential for a break below $2,631.72, which could trigger a sell-off toward the next significant target at $2,594. Conversely, a reversal above the pivot and sustained trading above $2,647.56 would be necessary to challenge the next resistance zones.
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