Gold’s Steady Climb Amid Global Economic Shifts: A Technical Analysis
Despite recent gains, gold‘s price (XAU/USD) is experiencing difficulty in sustaining its upward momentum, fluctuating within a tight range below the $2,040 level during Thursday’s Asian trading session.
The precious metal’s advance, following the Federal Open Market Committee (FOMC) meeting, appears to have paused near the 50-day Simple Moving Average (SMA), hovering below its recent peak achieved a week and a half ago. The optimistic global market sentiment, fueled by the Federal Reserve’s dovish stance and the anticipation of additional stimulus from China, continues to influence the financial landscape.
Additionally, positive economic data from China has spurred investor interest in riskier assets, creating a challenging environment for GOLD . The Federal Reserve, in a pivotal move, signaled the end of its monetary tightening, forecasting at least three rate cuts of 25 basis points each in 2024.
This forecast could cap the growth in US bond yields, consequently applying pressure on the US Dollar and, in turn, providing support to gold prices.
Investors are now keenly awaiting flash PMI data from the Eurozone, the UK, and the US for further insights into global economic health, which will likely impact gold demand. Despite these market dynamics, GOLD (XAU/USD) is poised to record modest weekly gains, partially recovering from last week’s drop from record highs.
Thursday brought a mix of sentiments with the release of encouraging US macroeconomic data, casting doubts on the immediacy of the Fed’s rate cuts and offering some support to US Treasury bond yields.
This development poses a challenge for gold prices in the current risk-on environment. Retail Sales in the US outperformed expectations, core Retail Sales showed an unexpected increase, and the US Labor Department reported a drop in unemployment claims, reaching a new low since mid-October. Chinese data also painted a positive picture, with notable increases in Retail Sales and Industrial Production in November.
The National Bureau of Statistics (NBS) of China commented on the sustained recovery in demand, easing concerns over deflation.
Market expectations are still tilted towards a rate cut by the Fed in its March meeting, with a high probability of a subsequent cut in May. This, coupled with the persistent weakness in the US Dollar, supports gold prices.
As the week concludes, the release of global PMI data is anticipated to provide further direction for GOLD traders, offering opportunities for short-term market moves.
Gold Technical Outlook
GOLD price exhibits a steady upward trajectory, persistently striving to re-enter the bullish channel. To maintain this positive trend for the day, the price needs to gather momentum for further ascent, targeting the next objective at $2,065.70.
Maintaining a position above $2,016.90 is crucial for the continuation of the bullish trend. A break below this level could subject the price to corrective bearish pressures.
The expected trading range for today is between the support at $2,020.00 and the resistance at $2,055.00, with the overall trend for the day leaning bullish.
Gold XAU Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals