Technical Analysis

GOLD Price Analysis – Nov 13, 2023

By LonghornFX Technical Analysis
Nov 13, 20233 min

Daily Price Outlook

Gold price (XAU/USD) maintained its upward rally and gained some further traction around $1,940, up 0.22% on the day. However, the reason for its upward rally can be attributed to the weakened US dollar, which has been losing ground despite the higher yields on US Treasury bonds.

Meanwhile, the stronger-than-anticipated Consumer Price Index (CPI) data released this week heightened the probability of the Federal Reserve opting to raise interest rates once more in December. Therefore, this development was seen as a key factor curbing losses in the US dollar and putting downward pressure on gold prices. Moreover, the ongoing concerns about economic growth in China will contribute to a decline in the price of gold.

Federal Reserve's Stance on Interest Rates and Impact on Precious Metals

It is important to highlight that Mary Daly, the President of the Federal Reserve Bank of San Francisco, has yet to determine whether the bank has concluded its series of interest rate hikes aimed at curbing inflation. Meanwhile, Federal Reserve Chair Jerome Powell has underscored the commitment to tightening policies even further if deemed necessary.

Thereby, traders are keeping a close eye on crucial data this week, with particular attention on the US Consumer Price Index (CPI). If the data exceeds expectations, there is a possibility that the Federal Reserve might opt for another rate hike in December. This could be negative news for precious metals, as higher interest rates make them less appealing.

China's Economic Impact on Gold Prices and Key Data Ahead

Moreover, worries about China's economic growth was seen as another key factor that can put pressure on gold prices. China, being the largest producer and consumer of gold globally, has a significant impact on the gold price. Last week, China's Consumer Price Index (CPI) dropped by 0.2% in October, indicating potential economic challenges.

Looking ahead, investors will closely watch China's Retail Sales and Industrial Production data. Meanwhile, the key event this week is the release of the US Consumer Price Index (CPI) on Tuesday.

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

GOLD (XAU/USD) - Technical Analysis

In the recent trading landscape, the gold market (XAU/USD) demonstrates a sense of tenacity, as indicated by its current trading around $1,934.82. This level reflects a subtle uptick within the two-hour trading window. The technical terrain on which gold navigates is marked by a series of resistance and support thresholds that provide a framework for its potential directional moves.

A notable point of resistance lies at $1,955.71, a barrier that gold must surpass to signal a decisive shift in market sentiment towards the bullish spectrum. Further resistance levels are etched at $1,970.86 and then at the more aspirational height of $1,990.07, a summit that remains untouched in recent times, posing a formidable challenge for bullish ambitions.

On the flip side of the market's scales, immediate support is found at $1,933.67. Should this floor give way under the weight of bearish forces, subsequent safety nets are positioned at $1,920.12, followed by a significant psychological marker at $1,909.18, which may entice buyers to re-emerge.

Turning to technical indicators, the Relative Strength Index (RSI) presents a notable reading of 34.64. Such a figure places the market sentiment on the cusp of oversold conditions, potentially prefacing a stage for the bulls should a pivot occur. This, coupled with the observation that the price of gold is currently below the 50 EMA of $1,955.78, suggests that the short-term trend is bearish, yet poised for a potential reversal if the market sentiment finds renewed optimism.

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