Technical Analysis

GOLD Price Analysis – Dec 07, 2023

By LonghornFX Technical Analysis
Dec 7, 20234 min

Daily Price Outlook

Gold price (XAU/USD) maintained its upward trend and remained well bid around $2,030 marks. However, this upward trend can be attributed to a risk-off market sentiment, which typically bolsters the appeal of safe-haven assets such as gold. Another important factor contributing to the positive momentum in gold prices is the anticipation that the Federal Reserve has ended its cycle of interest rate hikes.

Besides this, the recent dovish statements from European Central Bank (ECB) officials, coupled with decisions by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) to keep interest rates unchanged, further enhance the attractiveness of gold.

In contrast to this, the latest positive reversal in the US dollar price was seen as one of the key factors that cap further gains in the gold price. Notably, the weakening JOLTS Job Openings data from the United States on Tuesday, coupled with the softer ADP report on Wednesday, serves as evidence that the US job market is showing signs of a slowdown. This in turn, heightened concerns about an economic downturn in the world's largest economy. Consequently, this economic uncertainty is seen as providing additional support to the safe-haven appeal of gold.

Factors Influencing Gold Prices Amidst Weaker US Employment Data and Rate Cut Speculations

It's worth noting that weaker US employment data released this week suggests the Federal Reserve won't raise interest rates. This is good news for gold prices. The Labor Department's report on job openings hit a 2.5-year low, indicating lower demand due to interest rates. The ADP report also signals a cooling job market, with private payrolls rising by 103K in November.

Market predictions hint at a two-in-three chance of a rate cut by March, lowering US bond yields and supporting XAU/USD. Despite the US Dollar's recent gains, traders are cautious ahead of the crucial US NFP report, which will impact the Fed's policy outlook. The upcoming US Weekly Initial Jobless Claims are also in focus.

Economic Concerns and Geopolitical Tensions Drive Gold Price Surge

Furthermore, China's Trade Balance data revealed a surprising 0.6% drop in imports for November, raising concerns about weak domestic demand and recession risks. Meanwhile, Israel escalated its ground offensive against Hamas in the Gaza Strip's south and intensified strikes near Khan Younis. These developments could boost the price of gold as investors seek safe-haven assets amid increased geopolitical tensions.

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

GOLD (XAU/USD) - Technical Analysis

As of December 7, Gold exhibits a subtle yet noticeable upward movement, marking a 0.05% increase to $2026. Analyzing the 4-hour chart timeframe, the precious metal is currently trading around a critical pivot point of $2,034. The immediate resistance is identified at $2,052, with further resistance levels at $2,073 and $2,091, each representing potential barriers to Gold's ascent. On the flip side, the metal finds immediate support at $2,009, followed by subsequent levels at $1,989 and $1,967, which could provide a safety net against any downward pressure.

The Relative Strength Index (RSI) stands at 58, indicating a bullish sentiment without venturing into overbought territory. This suggests a continued interest among buyers, but with caution, as the market has not reached an overly enthusiastic state. The price of Gold is also trading above the 50-Day Exponential Moving Average (EMA) of $2,028, reinforcing the short-term bullish trend. However, the upward trendline breakout suggests a selling pressure below the $2028 mark, which traders should closely monitor.

The observed chart patterns and technical indicators collectively point to a cautiously optimistic outlook for Gold. The asset remains bullish above the $2010 threshold, suggesting that if it maintains its stance above this level, we may witness further tests of the resistance levels. This technical analysis is supported by broader market sentiments and economic indicators, which continue to play a significant role in influencing Gold's trajectory.

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