Technical Analysis

GOLD Price Analysis – Nov 07, 2023

By LonghornFX Technical Analysis
Nov 7, 20234 min

Daily Price Outlook

Gold (XAU/USD) price failed to maintain its recent gains and declined on Tuesday. It is currently trading just below the $1,970 level, marking a nearly two-week low. However, the reason for its decline can be attributed to the bullish US Dollar, which rebounding from its lowest level since September 20, putting downward pressure on gold.

Furthermore, the lack of developments in the Israel-Hamas conflict has prompted investors to shift away from safe-haven assets like gold. In the meantime, the ongoing strength of the USD is a crucial factor contributing to the decline in the price of gold. It's worth noting that there is a belief that the Federal Reserve (Fed) may not raise interest rates further, which could potentially help limit gold's losses in the face of economic uncertainties.

Factors Influencing Gold Prices Amidst Global Uncertainties and FOMC Indicators

Notably, the ongoing concerns about a potentially expanding crisis in the Middle East, along with economic uncertainties, especially in China and Europe, are causing concern among investors. This uncertainty is evident in the relatively negative sentiment in the stock markets, which, in turn, is offering some support to the price of safe-haven gold.

Moving forward, the release of US Trade Balance data on Tuesday may have an impact on trading during the early North American session. However, the primary focus will be on speeches from several influential members of the Federal Open Market Committee (FOMC). Furthermore, factors such as geopolitics and overall market sentiment will also play a significant role in determining the direction in which the price of gold moves next.

Factors Influencing Gold Prices and the Federal Reserve's Uncertainty

It's important to note that the uncertainty surrounding the Federal Reserve's next actions is prompting some investors to repurchase their short positions in the US Dollar, which is exerting downward pressure on the price of gold. However, the recent report on US jobs, published on Friday, has reinforced the belief that the Federal Reserve will maintain its current stance in their December meeting.

Fed Governor Lisa Cook mentioned on Monday that the present interest rate target should suffice to bring inflation back to the central bank's 2% target. Minneapolis Fed President Neel Kashkari added that the US economy has demonstrated considerable resilience, and exercising excessive caution in raising rates won't help in achieving the 2% inflation target within a reasonable timeframe.

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

GOLD (XAU/USD) - Technical Analysis

As we observe the 4-hour chart for Gold on November 7, the precious metal presents a conundrum for traders. Currently trading at $1974, Gold has experienced a modest decline of 0.2% within the last 24 hours, hinting at a cautious sentiment among investors. The technical landscape offers mixed signals, with key price levels delineating the battlegrounds for bullish and bearish forces.

The pivot point for the session stands at $1972.03, with immediate resistance observed at $1989.73. Should this level succumb to bullish pressure, we may see attempts to challenge further resistances at $2010.39 and $2028.09. Conversely, the downside is cushioned by immediate support at $1951.97, followed by subsequent levels at $1934.26 and $1915.97.

Delving into technical indicators, the Relative Strength Index (RSI) lingers at 38, suggesting that while sellers have had the upper hand recently, the market is not yet in an oversold state which could have prompted a reversal. Meanwhile, the MACD indicator is trending bearishly as the main line remains below the signal line, reinforcing the current negative sentiment.

The 50-Day Exponential Moving Average (EMA) stands at $1981.64, just above the current price, indicating a tentative bearish bias in the short term. As for chart patterns, there's a detectable strain of bearish sentiment as no definitive pattern offers a clear directional cue, with candlestick analysis pointing towards consolidation with a slight bearish tilt.

In conclusion, the overall trend for Gold on this day appears bearish as long as it remains below the crucial threshold of $1975. However, the markets remain on a knife-edge, with any shift in sentiment or macroeconomic trigger capable of swinging prices in either direction. Traders would be wise to keep an eye on the aforementioned technical levels and indicators to gauge the next likely move in this precious metal.

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