Technical Analysis

GOLD Price Analysis – Nov 28, 2023

By LonghornFX Technical Analysis
Nov 28, 20234 min

Daily Price Outlook

Gold prices (XAU/USD) have extended their three-day upward rally, maintaining a strong position near a multi-month peak. However, this bullish momentum can be attributed to growing expectations of a pause in the Federal Reserve's monetary tightening cycle. Furthermore, bets on a Fed rate cut in 2024 have been increased in response to signs of easing inflationary pressures. Hence, this ongoing trend undermines the strength of the US Dollar (USD) and contributes to the gains in the price of gold.

Federal Reserve Stance and Economic Indicators Impact Gold Prices

As previously mentioned, there is a growing consensus that the Federal Reserve will abstain from further interest rate hikes. This trend has proven beneficial for gold, which has successfully held its ground above the $2,000 mark. However, the release of subdued US consumer inflation figures sparked speculation that the Fed might choose to keep rates unchanged, and there were even considerations of potential policy easing in 2024.

It should be noted that the previously released data indicates that the sales of new homes in the US experienced a strong drop than anticipated in October, primarily attributed to higher mortgage rates rendering homes less affordable.

Consequently, the 10-year US Treasury bond yield is hovering near a two-month low, while the US Dollar has reached a nearly three-month low. This was seen as one of the key factor that kept the gold price higher.

Global Economic Concerns and Market Dynamics Impacting Gold Prices

In addition to this, the ongoing concerns about a potential global economic downturn was seen as another factor providing support for the safe-haven gold price. Conversely, the risk-on sentiment in Asian equity markets could limit the gains in safe-haven gold.

Moving on, the traders seem hesitant to place any strong position as they prefer to wait for the release of the Personal Consumption Expenditure (PCE) Price Index from the United States (US) for some meaningful impetus. Furthermore, the release of the Conference Board's Consumer Confidence Index and speeches by influential FOMC members will also be in spotlight.

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

GOLD (XAU/USD) - Technical Analysis

Gold's market position remains steadfast, trading at $2014 with a static 24-hour movement, reflecting a stable market sentiment. The precious metal, often seen as a safe-haven asset, is currently navigating through key technical levels that could define its short-term trajectory.

The pivot point for gold is established at $2018, with immediate resistances placed at $2033, $2060, and $2087. These resistance levels are crucial for gold's potential upward movement and will test its ability to maintain the bullish momentum. On the downside, immediate support is found at $1991, followed by stronger support levels at $1975 and $1949. These points are vital for cushioning gold against any potential price declines.

From a technical indicators standpoint, the Relative Strength Index (RSI) is at 68, nearing the overbought threshold of 70. This suggests that gold might be approaching a region where a pullback or consolidation could occur. However, an RSI above 50 typically reflects bullish sentiment, indicating that the current trend has robust buying pressure.

The Moving Average Convergence Divergence (MACD) shows a value of 0.79, with a signal line at 6.96, indicating a potential for upward momentum, albeit at a slower pace. The gap between the MACD line and the signal line is not wide, suggesting cautious bullish momentum in the near term.

Another crucial technical indicator, the 50-day Exponential Moving Average (EMA), is at $2010. Gold trading above its 50 EMA underscores the short-term bullish trend, with the EMA serving as a dynamic support in this context.

An observed chart pattern is the upward channel, with current support at $2009 and resistance at $2022. This pattern suggests that the bullish momentum is likely to continue, provided gold stays above these channel boundaries.

In conclusion, the overall trend for gold appears to be bullish, particularly if it sustains above the $2010 mark. The short-term outlook suggests that gold might test higher resistance levels in the upcoming sessions, contingent upon maintaining the momentum and crossing pivotal thresholds like the immediate resistance at $2033.

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