Technical Analysis

GOLD Price Analysis – Nov 06, 2023

By LonghornFX Technical Analysis
Nov 6, 20234 min

Daily Price Outlook

Gold (XAU/USD) price has extended its bearish trend and is currently hovering around the $1,980 mark. However, the reason for its downward rally can be linked to the strength of the US dollar, which has been reinforced by a increase in US Treasury bond yields. Consequently, the robust US dollar has become a major factor exerting downward pressure on the gold. Furthermore, the risk-on sentiment in the market has also played a key role in keeping gold prices under pressure.

Notably, the Federal Reserve's expected decision to keep interest rates unchanged in December and stop further rate hikes could weaken the US dollar's strength. This, in turn, might lend some support to gold prices. Besides this, concerns about an escalation in the Israel-Hamas conflict were seen as another key factor that could help the gold price to limit its deeper losses.

Factors Influencing the US Dollar and Gold Prices

It's important to note that the US Dollar is making a modest recovery from a six-week low and this upturn is supported by an increase in US Treasury bond yields, exerting pressure on Gold prices. Meanwhile, the anticipations that the Federal Reserve won't raise rates further, driven by weaker US economic data released on Friday, are likely to hinder a significant strengthening of the US Dollar.

According to the latest data, Non-Farm Payroll (NFP) report for October showed that the US economy added 150,000 jobs, falling short of the expected 180,000. Even worse, the previous month's job figures were revised down from 336,000 to 297,000, which is not a good sign.

Furthermore, the US ISM Non-Manufacturing PMI dropped to 51.8 in October, marking a five-month low compared to the previous month's 53.6. This supports the expectation that the Fed will probably uphold its current policies at the December meeting. The combination of these factors might affect the Dollar's trajectory and potentially impact Gold prices.

Geopolitical Uncertainties Boost Gold Prices

Furthermore, Israel has rejected calls for a ceasefire in Gaza and is planning to intensify its operations against the Palestinian group, Hamas. Israel's chief military spokesperson mentioned that they targeted Hezbollah's terrorist sites in southern Lebanon as a response to a missile attack that killed an Israeli citizen. In retaliation, Hezbollah fired rockets at Kiryat Shmona in northern Israel, vowing not to tolerate attacks on civilians and promising a strong response.

Hassan Nasrallah, the leader of Hezbollah, stated that his Iran-backed group is not deterred by the presence of US warships, and they are considering all options for an expansion of the conflict into Lebanon. This situation has raised concerns about further escalation in the region.

Therefore, the news of escalating conflict in the region often increases uncertainty, which can drive investors towards safe-haven assets like gold, potentially causing upward pressure on its price.

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

GOLD (XAU/USD) - Technical Analysis

As the financial markets open their doors to a new trading week, the spotlight falls on Gold, which has recently been the subject of heightened investor attention. The precious metal is trading at $1,983.755, marking a slight decline of 0.46% in the past 24 hours. This movement is captured within the confines of a 4-hour chart, offering a granular view of the oscillations between key support and resistance levels.

At the heart of the technical analysis are the pivot points, which serve as beacons for potential price movements. The immediate pivot point stands at $1,990, with subsequent resistance levels etched at $2,010, $2,029, and $2,048. On the flip side, support levels are found at $1,972, $1,952, and $1,934, each representing a potential floor for price dips.

The narrative of the technical indicators adds depth to the analysis. The Relative Strength Index (RSI), a measure of momentum, reads at 46, indicating a market in equilibrium without a clear directional bias. This neutrality in sentiment is a hallmark of a market in contemplation, weighing its next significant move. The 50-Day Exponential Moving Average (EMA), currently at $1,989, straddles the current price, further emphasizing the market's indecisive stance.

The chart patterns lend an additional layer of insight. A symmetrical triangle formation is observed, a pattern often associated with periods of consolidation followed by a breakout. This pattern, coupled with a recent doji candlestick, underscores the market's current state of hesitation.

In conclusion, the technical outlook for Gold is delicately poised. The overall trend skews towards the bullish side, contingent on the metal's ability to sustain itself above the $1,982 threshold. Should this level hold, the coming days may see Gold challenge the immediate resistance at $2,010, as buyers attempt to wrest control from the grips of uncertainty.

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