Technical Analysis

GOLD Price Analysis – Dec 08, 2023

By LonghornFX Technical Analysis
Dec 8, 20233 min

Daily Price Outlook

Gold prices (XAU/USD) extended their three-day winning streak, staying strong above the $2,031 level. However, the upward movement is driven by the anticipation that interest rates in the United States (US) have reached their peak. Therefore, bullish investors are holding off thier bets, anticipating the release of the highly anticipated US Nonfarm Payrolls (NFP) report.

Investors are looking for signs of a weakened labor market, which could increase the probability of a Federal Reserve (Fed) rate cut as soon as March 2024. This potential shift in monetary policy would boost the appeal of the non-yielding gold.

Gold Prices Surge on Market Confidence in Fed Rate Cut Amid Job Market Concerns

It's important to highlight that the belief that the Federal Reserve won't raise interest rates further and might even lower them in 2024 is boosting the price of gold. Recent job market reports, like the JOLTS Job Openings and ADP, suggest a slowdown, supporting the idea of a more dovish stance by Fed.

It should be noted that traders are indicating a 60% chance of a rate cut by March 2024. However, the US Dollar is getting stronger because of a slight increase in the 10-year government bond yield, which is holding back gold's gains.

Therefore, the belief in a dovish Fed and a potential rate cut in 2024 boosts gold prices. Despite a stronger US Dollar, if the upcoming jobs report disappoints, the Fed's dovish stance could further benefit gold amid economic uncertainties.

Gold Faces Uncertainty as Improved Market Sentiment and Upcoming Job Data Impact Safe-Haven Appeal

Furthermore, the situation in the Middle East hasn't worsened, and a positive trend in US stock markets overnight is dampening the appeal of the safe-haven gold (XAU/USD). Traders are now eyeing the upcoming US job data to gauge labor market conditions and get hints on when the Fed might ease its policies.

Moreover, the robust surge in US stocks is putting pressure on gold. Despite anticipated changes in Fed policy and worries about China's economic state and global tensions, gold prices aren't dropping significantly.

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

GOLD (XAU/USD) - Technical Analysis

As of December 8th, Gold (XAU/USD) is witnessing a marginal upswing, with its current trading value standing at $2031, marking a slight 0.12% increase. This recent activity in gold prices is indicative of the market’s ongoing struggle to find a consistent direction, oscillating around a key pivot point of $1,976.

The immediate resistance levels are poised at $2,023, followed by $2,049, and a significant barrier at $2,099, marking potential ceilings for any upward movements. Conversely, the supports are established at lower thresholds of $1,949, $1,923, and $1,897, which may provide a cushion against bearish trends.

The Relative Strength Index (RSI) hovers at a neutral 48, suggesting a market that is neither overbought nor oversold, reflecting an equilibrium between buying and selling pressures. The Moving Average Convergence Divergence (MACD) presents a reading of 1, crossing above its signal line at -1.60, which could be interpreted as a potential signal for emerging upward momentum.

However, a notable technical observation is the formation of a double-top pattern, with an extending resistance at around $2,035. This pattern indicates that a closing below this level could potentially trigger a selling pressure, tilting the balance toward a bearish trend.

Given these technical indicators, the overall trend for gold appears to be bearish below the $2,035 mark. The short-term forecast suggests that the asset may test lower support levels in the coming days, especially if the resistance at $2,035 holds firm. Investors and traders should closely monitor these levels, as a breakout above or below these points could significantly influence the market’s trajectory.

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