Technical Analysis

GOLD Price Analysis – Nov 27, 2023

By LonghornFX Technical Analysis
Nov 27, 20234 min

Daily Price Outlook

Gold (XAU/USD) price has maintained its upward trajectory, holding strong around the $2,010 level. However, this bullish movement can be attributed to the weakened US dollar. The US dollar faced pressure due to mixed S&P Global PMI data, leading market participants to speculate that the US Federal Reserve (Fed) might consider easing monetary policy in 2024.

Furthermore, the positive sentiment in the gold market was further reinforced by news that the People's Bank of China (PBoC) issued a notice to enhance financial support for private firms. This development added to the overall optimism surrounding gold, contributing to the ongoing uptrend in its price.

Gold Gains Momentum as Gloomy Sentiment Surrounds the US Dollar

As previously mentioned, gold is experiencing a surge in value, thanks to the bearish sentiment surrounding the US Dollar. However, this downward trend in the USD is influenced by a combination of mixed data like the S&P Global PMI data. This has led to speculation among investors that the US Federal Reserve (Fed) may consider adopting a more accommodative monetary policy in 2024.

Hence, the ongoing scenario is improving gold's appeal as a safe-haven option amid uncertainties in the dollar and lingering questions about the direction the Fed will take with its monetary decisions.

At the data front, the US S&P Global Composite PMI held steady at 50.7 in November. While the Services PMI went up to 50.8, the Manufacturing PMI dipped to 49.4, missing the estimated 49.8. It should be noted that the broad-based US dollar is struggling around 103.40, finding it hard to stop losses despite improved US Treasury yields. Notably the 10-year and 2-year bond yields are at 4.50% and 4.97%, respectively.

Positive Developments in China's Support for Private Firms May Boost Gold Prices

Furthermore, the People's Bank of China (PBoC) has given a notice to help out private companies more, which was seen as another key factor that kept the gold price higher. They are supporting these companies in different ways, like helping them go public, get money, merge with other companies, and make changes to how they operate.

Moreover, PBoC is planning to increase the amount of bonds that private companies can get. In the meantime, they're telling banks not to stop giving loans to private companies that are having some temporary problems but still have good technology.

Therefore, the People's Bank of China's (PBoC) efforts to support private companies by facilitating their access to capital create an environment of economic stability and growth. This, in turn, boosts investor confidence, leading to increased demand for safe-haven assets like gold, hence potentially driving up its price.

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

GOLD (XAU/USD) - Technical Analysis

In today's technical analysis of gold, we observe a positive sentiment in the market as the precious metal trades at around $2009, reflecting a 0.41% increase in the past 24 hours. This uptick is part of a consistent bullish trend that gold has been experiencing recently.

The pivot point for gold stands at $2017, indicating a crucial juncture in determining its short-term movement. Resistance levels are identified at $2034, $2060, and $2086, which gold may encounter if the bullish momentum continues. Conversely, support levels are established at $1991, $1976, and $1949, which could provide a cushion if a downward correction occurs.

From a technical indicators perspective, the Relative Strength Index (RSI) stands at 68, nearing the overbought threshold of 70. This suggests that gold is potentially at a juncture where a pullback or consolidation could occur. However, an RSI above 50 generally indicates bullish sentiment, underlining the buying pressure behind the current trend.

The Moving Average Convergence Divergence (MACD) readings show a value of 0.92 with a signal line at 5.61. This configuration, while showing positive momentum, suggests a cautious uptrend as the gap between the MACD line and the signal line is not significantly large.

Another crucial indicator, the 50-day Exponential Moving Average (EMA), is at $2002. Gold trading above its 50 EMA underscores the short-term bullish trend, with the EMA serving as a dynamic support in this context.

A key pattern observed in the gold chart is a triple top breakout at $2005. This pattern is typically a bullish signal, indicating the possibility of an upward trend continuation if gold remains above this level.

In conclusion, the overall trend for gold appears to be bullish, particularly if it maintains its stance above the $2005 level. The near-term forecast, based on the current technical setup, suggests that gold might test higher resistance levels in the upcoming sessions, contingent upon maintaining the momentum and crossing pivotal thresholds like the immediate resistance at $2034. As always, market dynamics and external economic factors could influence these predictions, necessitating continuous monitoring of gold's price movements and related economic indicators.

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