Technical Analysis

GOLD Price Analysis – March 26, 2024

By LonghornFX Technical Analysis
Mar 26, 20243 min

Daily Price Outlook

Despite geopolitical tensions such as the Russia-Ukraine conflict and concerns over a Gaza Strip ceasefire, the price of the precious metal gold has failed to gain traction and remains sluggish near the 2,172 level. However, this sluggish performance can be attributed to uncertainty surrounding global economic conditions. Gold often rise during times of economic instability, but other factors have been offsetting these influences. These include the renewed strength of the US dollar, rising bond yields, and expectations of tightening monetary policy by central banks, all of which reduce the appeal of non-interest-bearing assets like gold in the short term.

Fed's Projected Rate Cuts Boost Gold Amidst USD Weakness

On the US front, the Federal Reserve's projection of three rate cuts in 2024 has been a key driver in supporting gold prices. These rate cut expectations undermine the strength of the US dollar, making gold more attractive to investors. However, the weaker dollar tends to make gold cheaper for holders of other currencies, thereby increasing its demand and price. Additionally, the anticipation of a more accommodative monetary policy by the Fed enhances the appeal of non-yielding assets like gold, as it reduces the opportunity cost of holding them compared to interest-bearing investments.

Hence, the dovish stance is bolstered by weaker US data, which suggests that the economy may need additional support through lower interest rates to stimulate growth and inflation. This could further boost gold prices as lower interest rates make gold more attractive to investors seeking safe-haven assets amid economic uncertainties.

Impact of Upcoming US Macro Data on Gold Price

Moving ahead, investors are closely monitoring upcoming US macroeconomic data releases for their impact on gold prices. These include the release of Durable Goods Orders, the Conference Board's Consumer Confidence Index, and the Richmond Manufacturing Index. Any signs of economic strength or higher-than-expected inflation could reignite concerns about the Fed's stance on monetary policy, leading to a shift in market sentiment towards gold. However, if the data indicates weakness in the economy or lower inflation than anticipated, it could further bolster expectations for Fed rate cuts and support gold prices.

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

GOLD (XAU/USD) - Technical Analysis

In today’s market, Gold has shown a slight increase, trading at $2172.125, marking a 0.07% uptick. This movement positions Gold just above a pivotal juncture, with an eye towards a potential rise, given the current market dynamics and geopolitical uncertainties that traditionally favor safe-haven assets.

Technical analysis reveals a pivot point set at $2190, with the asset facing immediate resistance at $2200 and subsequent levels near $2199 and $2223. On the downside, support is found at $2150, followed by $2138 and $2124, indicating a strong foundation preventing significant drops. The technical indicators, including a Relative Strength Index (RSI) of 50, suggest a balanced market sentiment. Moreover, the 50-Day Exponential Moving Average (EMA) at $2168, slightly below the current price, alongside a higher 200-Day EMA, underscores a cautiously bullish outlook for Gold.

Considering these factors, the technical outlook recommends a strategic entry for buying at $2166, aiming for a take profit at $2190, with a stop loss set at $2150. This strategy is predicated on Gold’s resilience and its traditional role as a hedge against inflation and currency devaluation, offering a tactical advantage in the current financial landscape.

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