Technical Analysis

GOLD Price Analysis – Feb 12, 2024

By LonghornFX Technical Analysis
Feb 12, 20243 min

Daily Price Outlook 

Despite the bearish US dollar, the Gold price (XAU/USD) has been losing its momentum and flashing red around the $2,020 level. However, the risk-on-market sentiment, backed by the hawkish Fed expectations and upbeat economic data, was seen as a major cause behind gold's latest decline.

In contrast to this, the broad-based US dollar is dropping despite the upbeat US data, which may help the gold price to trim its losses as the bearish US dollar typically boosts the price of gold. Moving ahead, traders seem hesitant to place any strong positions ahead of the latest US consumer inflation figures on Tuesday.

Federal Reserve's Hawkish Stance and Gold Price Pressure

It's worth noting that the Federal Reserve plans to keep interest rates high because the US economy is strong. This could dampen gold prices, as investors expect fewer rate cuts. Fed members like Lorie Logan and Raphael Bostic agree, wanting to see more evidence of lasting inflation progress before considering rate cuts. This stance is causing investors to reconsider expectations for lower rates. However, the uncertainty surrounding the Federal Reserve interest rate keeps the US dollar on the defensive track.

Therefore, this news suggests a potentially longer period of higher interest rates, dampening gold's appeal, possibly leading to downward pressure on its price.

Israeli Airstrikes in Rafah and Gold's Safe-Haven Appeal

Israeli airstrikes in Rafah killed at least 67 people, as reported by local health officials. The strikes targeted houses and mosques as part of a mission to rescue two Israeli hostages held by Hamas militants. Prime Minister Benjamin Netanyahu praised the mission, promising to bring back all hostages. Many Palestinians have been forced to leave their homes due to ongoing evacuations, raising concerns for their safety.

Meanwhile, the doctors have called for the airstrikes to stop, noting the lack of safe places in Gaza. President Biden urged Israel to ensure civilian safety. Netanyahu promised safe passage for Palestinians, but where they will go remains uncertain. He also reiterated plans to attack Hamas in Rafah, emphasizing the importance of winning.

Therefore, the Israeli airstrikes in Rafah and the ongoing conflict raise concerns, potentially boosting safe-haven assets like gold due to increased uncertainty and geopolitical tensions.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold's luster dimmed slightly in the latest session, closing at $2023.325, a fractional decrease of 0.05%. This subtle movement belies the potential volatility underlying the precious metal's market. The established pivot point at $2011 could signal a shift in direction, with immediate resistance observed at $2028. Further hurdles lie ahead at $2042 and $2058, which could resist upward price excursions.

Conversely, support levels stand firm at $1998, followed by $1982 and $1965, safeguarding against deeper retracements. The Relative Strength Index (RSI) at 41 indicates that gold is neither overbought nor oversold, hovering in a moderate trading zone.

The MACD presents a more complex picture; the value at -0.956 and the signal at -2.441 suggest that the downtrend is losing momentum, possibly forecasting a change in sentiment.

Supporting this potential uptrend is the 50-Day EMA at $2027, which currently exceeds the price, signifying that a rise above this average could confirm a bullish trend. An upward trendline has been identified as providing support near the $2024 level, indicating sustained buying interest.

In conclusion, traders might consider a bullish stance with an entry point above $2020, targeting a take profit level at $2038, while setting a stop loss at $2007 to mitigate risks.

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