Technical Analysis

GOLD Price Analysis – Jan 11, 2024

By LonghornFX Technical Analysis
Jan 11, 20243 min

Daily Price Outlook

Gold price (XAU/USD) has maintained its upward trend, currently hovering around the $2,032 level. This upward movement can be attributed to a weaker USD, geopolitical risks, and economic concerns in China. Furthermore, uncertainty regarding the Federal Reserve's rate-cut decisions, coupled with geopolitical tensions from the Israel-Hamas conflict and concerns about a sluggish recovery in China, contribute to the support for the precious metal.

Impact of Federal Reserve Uncertainty and Inflation Data on Gold Prices

It's important to highlight that uncertainty surrounding the Federal Reserve's stance is affecting the US Dollar. The Fed's recent shift towards a more accommodating approach prompted the market to expect five interest rate cuts totaling 140 basis points by the end of 2024. However, positive US economic data and mixed signals from Fed officials are causing investors to reconsider the extent of expected rate cuts.

The upcoming US consumer inflation report is crucial. If inflation is lower than expected, it may push the Fed to cut rates, negatively impacting the US Dollar and supporting Gold prices. On the other hand, stronger inflation could boost the Dollar and weigh on Gold.

Therefore, the uncertainty about the Federal Reserve's stance, potential rate cuts, and upcoming inflation data make Gold prices sensitive. If inflation is lower, it could support Gold, but if stronger, it may weigh on the precious metal due to a potential boost in the US Dollar.

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

GOLD (XAU/USD) - Technical Analysis

On Thursday, January 11, Gold (XAU/USD) showed a modest uptick of 0.32%, reaching $2030, indicating a cautious yet positive market sentiment. The precious metal hovers around the pivot point of $1,995, with eyes set on immediate resistance levels at $2,020, $2,050, and $2,074. These thresholds are key in determining Gold's capacity to sustain its current momentum or face resistance.

Support levels at $1,966, $1,937, and $1,908 are equally crucial, providing potential stability against any downward pressure. The current Relative Strength Index (RSI) reading at 46 suggests a neutral market sentiment, neither too bullish nor bearish. This indicates a market in balance, waiting for a clear directional signal.

Further contributing to the technical landscape is the MACD (Moving Average Convergence Divergence), currently at 0.67 with a signal line at -4.11. This configuration may suggest potential upward momentum, albeit with caution given the relatively neutral RSI.

The 50-Day Exponential Moving Average (EMA) is positioned at $2,029, just below the current price level. This hints at a short-term bullish trend for Gold, but it's a delicate balance as the metal navigates within a symmetrical triangle pattern. This pattern signifies a period of consolidation, with the market undecided about Gold's next significant move.

In conclusion, while Gold exhibits a slightly bullish trend in the short term, the broader market outlook remains neutral.

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