Technical Analysis

GOLD Price Analysis – March 11, 2024

By LonghornFX Technical Analysis
Mar 11, 20244 min

Daily Price Outlook

Gold price (XAU/USD) consolidating within its bullish range and remained well bid around $2,190 marks. However, the reason for its upward trend can be attributed to a combination of factors, including risk-off market sentiment, which was being pressured by geopolitical tensions, along with expectations that the global economy could weaken in 2024. The risk-off market sentiment underpinned the gold price as it recently hit the fresh record high touched on Friday. Furthermore, the upticks in the gold price were bolstered by increasing expectations that the Federal Reserve (Fed) will start cutting interest rates in June amid downbeat US unemployment data.

Impact of US Economic Indicators on Gold Prices

It's worth noting that the recent rise in the US unemployment rate has led to expectations that the Federal Reserve will lower interest rates in June. This has kept US dollar low and contributed to the gold gains. This data was released on Friday showed the US unemployment rate reaching its highest level in two years, further increasing the likelihood of a rate cut by the Federal Reserve. This uncertainty and risk aversion are likely to continue supporting gold prices in the near term.

On the data front, the US economy added 275,000 new jobs in February, surpassing the estimated 200,000, although January's numbers were revised down to 229,000 from 353,000. Meanwhile, the wage growth, measured by Average Hourly Earnings, increased by 4.3% annually, slightly lower than January's 4.4%, missing market expectations. However, the possibility of a Fed interest rate cut in May rose to 30% after the report, but June remains the most anticipated timing for any such action. Consequently, the yield on the 10-year US government bond fell to a one-month low, dragging the US Dollar down and boosting gold prices.

Therefore, the increased likelihood of a Fed rate cut due to higher unemployment, are expected to continue supporting gold prices in the near term amid uncertainty and risk aversion.

Impact of Geopolitical Tensions and Economic Concerns on Gold Prices

On the geopolitical front, the ongoing tensions in the middle east and concerns about a global economic slowdown in 2024 are driving investors towards the safe-haven XAU/USD, supporting gold prices. It should be noted that the reports from UNRWA highlight widespread hunger in Gaza as Ramadan begins, emphasizing the need for an immediate ceasefire. Israeli forces reportedly barred Palestinians from entering al-Aqsa Mosque in East Jerusalem, sparking tensions. Ismail Haniyeh of Hamas blames Israel for the failure to secure a ceasefire before Ramadan, emphasizing the desire for peace.

Therefore, the ongoing geopolitical tensions and economic concerns may continue to drive investors towards the safe-haven XAU/USD, supporting gold prices amid uncertainty and the need for stability.

Looking forward, traders are awaiting the release of the latest US consumer inflation figures on Tuesday as it will play a key role in influencing expectations about the Fed's rate-cut path.

Gold Price Chart - Source: Tradingview
Gold Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold's market stance on March 11, with a price holding steady at $2,179.18, reflects a moment of equilibrium amidst fluctuating market sentiments. The technical landscape, as delineated by a 4-hour chart perspective, places the pivot point at $2,196.42, indicating a critical juncture for future price movements. Resistance levels are charted progressively higher at $2,227.22, $2,251.98, and $2,277.02, suggesting potential barriers to upward momentum. Conversely, support is firmly established at $2,156.18, with additional safety nets at $2,130.57 and $2,111.27, delineating zones where buying interest may resurge.

The Relative Strength Index (RSI) at 74 veers into the overbought territory, hinting at potential for a price pullback, while the 50-Day Exponential Moving Average (EMA) at $2,120.30 provides a bullish backdrop, underscoring a prevailing uptrend that has buoyed gold prices above recent averages.

Given these dynamics, the current technical outlook suggests a cautious approach to gold trading. Entry for a sell position is advised below $2,179.18, with a take-profit target set at approximately $2,130.57, and a stop-loss order should be placed to limit potential losses at around $2,196.42. 



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