Technical Analysis

GOLD Price Analysis – Nov 30, 2023

By LonghornFX Technical Analysis
Nov 30, 20234 min

Daily Price Outlook

Gold (XAU/USD) experiences a period of stabilization in the early European trading hours on Thursday. After achieving its highest levels since May 5 just a day earlier, the metal now shows signs of consolidation. Investors are exhibiting caution, opting to await the crucial US inflation data before committing to new market positions.

Anticipation Ahead of US PCE Price Index Release

The upcoming release of the US Personal Consumption Expenditures (PCE) Price Index, scheduled for the North American session, is highly anticipated. This key inflation indicator could significantly sway the Federal Reserve's upcoming policy decisions, thereby impacting the US Dollar's (USD) strength and subsequently influencing gold, a non-yielding asset.

Factors Influencing Current Market Trends

As the market braces for the PCE data, the US Dollar finds some footing, recovering modestly from its August 11 low. This development coincides with a positive sentiment in US equity futures, presenting challenges for gold, typically considered a safe-haven asset. However, expectations that the Fed might pause its interest rate hikes and potentially reduce rates by March 2024 are limiting any substantial gains for the US Dollar. These speculations are supported by China's economic challenges, providing indirect support to XAU/USD.

Federal Reserve's Stance and Its Impact

Recent comments from Federal Reserve officials hint at a potential halt in interest rate hikes, a factor that has been buoying gold prices. Notably, Fed Governor Christopher Waller suggested the possibility of upcoming rate cuts, while Cleveland Fed President Loretta Mester acknowledged progress in controlling inflation. Market forecasts now include a total of 100 basis points in rate reductions by the Fed in 2024, a sentiment echoed by the dip in US Treasury bond yields.

Treasury Yields and Economic Data Influence

The yield on the 10-year US Treasury bond, which recently surpassed 5% for the first time in 16 years, is now hovering near its lowest since mid-September. Meanwhile, the yield on the two-year note, sensitive to rate changes, remains low, though a slight uptick in the Dollar limits XAU/USD gains. The revised US GDP figures, showing a 5.2% growth in Q3, provided a modest boost to the Dollar, yet the dovish outlook for the Fed is likely to restrain any significant recovery from its recent lows.

China's Economic Indicators and Global Concerns

Data from China further influences market dynamics, with the Manufacturing PMI falling slightly to 49.4 and the non-manufacturing PMI declining to 50.2. These figures raise concerns about the health of the world's second-largest economy, potentially affecting global market trends and commodity prices, including gold.

In conclusion, as investors navigate through these complex economic indicators and policy speculations, gold prices are likely to continue reflecting the interplay between global economic health, Federal Reserve policy expectations, and the resulting currency fluctuations.

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

GOLD (XAU/USD) - Technical Analysis

As the curtain rises on the last trading day of November, gold exhibits a subtle uptrend, with the price slightly inching up by 0.09% to $2,046. This incremental rise is a testament to the precious metal’s persistent allure amid a complex macroeconomic tableau. On the technical front, gold’s movements are encapsulated within a well-defined range, characterized by a pivot point at $2,034, which serves as the crucible for its short-term trajectory.

The immediate resistance for gold is perched at $2,060, with further barricades at $2,087 and $2,112. Should the luster of gold diminish, it would find support at $2,017, with additional safety nets at $2,017 and $1,975, promising to arrest any potential freefalls.

Indicators paint a mixed picture; the Relative Strength Index (RSI) stands at an elevated 73, traditionally signaling overbought conditions that could precede a pullback. However, the Moving Average Convergence Divergence (MACD) at 0.57, with a signal of 12.34, isn’t as emphatic, offering no clear directional bias. The 50-Day Exponential Moving Average (EMA), currently at the $2,040 mark—gold’s current trading price—suggests a neutral to slightly bullish sentiment, as prices teeter above this moving average.

The chart patterns observed do not assert a dominant narrative, with gold’s recent price action not forming any discernible patterns that would imply a breakout in either direction. This lack of pattern clarity dovetails with the hovering RSI, painting a picture of uncertainty.

In conclusion, the golden narrative is cautiously optimistic, buoyant above the pivot point of $2,034, yet vulnerable to shifts in sentiment. The short-term forecast is bullish with an eye on the resistance at $2,060, but traders should brace for volatility, especially given the overextended RSI.

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