Daily Market Analysis: Gold’s Resilience Amidst Economic Headwinds and Fed Policy Anticipation

At the outset of the week, GOLD (XAU/USD) demonstrated resilience, attracting buyers around the $1,973 mark, thereby halting the slight retracement from its two-week peak observed on Friday. The precious metal, currently trading just shy of the $1,985 level, evidences a modest 0.20% increase for the day.

This suggests a potential continuation of its robust recovery from the monthly low recorded last Monday, influenced partly by the market’s dovish expectations of the Federal Reserve’s (Fed) future actions.

The consensus is growing around the notion that the Fed will hold interest rates steady at its December 2023 meeting, with a likelihood of initiating rate cuts in 2024. This sentiment appears to be exerting pressure on the US dollar (USD), keeping it near its lowest point since September 1. Moreover, the deteriorating global economic climate, coupled with escalating geopolitical tensions, has been bolstering the appeal of GOLD as a safe-haven asset, thus supporting its upward trajectory.

However, the key question remains whether buyers will maintain their dominance or adopt a cautious stance, especially in anticipation of the upcoming release of the FOMC meeting minutes on Tuesday.

These minutes are anticipated to provide deeper insights into the Fed’s interest rate trajectory and the policymakers’ stance on potential rate hikes within the year. Such revelations are expected to be significant determinants of the direction of gold, a non-yielding asset, in the near term.

Gold Technical Outlook

The GOLD price has successfully tested and held above the first critical support base at 1975.00, displaying optimistic indicators through stochastic analysis. This positive sentiment is anticipated to fuel a continuation of the expected bullish trend, targeting the 2000.00 level, followed by 2009.30 as subsequent key milestones.

The EMA50 provides underlying support, bolstering the prospects of a sustained bullish inclination on an intraday basis. However, it’s imperative to note that a breach below the 1975.00 level, followed by a dip under 1962.35, would invalidate this optimistic scenario, potentially steering gold back into a corrective bearish path.

The trading range for today is projected to oscillate between the 1970.00 support and the 2000.00 resistance level, with the day’s trend expected to be predominantly bullish.

Gold Live Chart