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XAU Analysis – One Mistake to Avoid Trading Gold Now

Lows are still getting higher in Gold

Gold saw some elevated demand from early October until December, as geopolitical tensions increased, while central banks started turning the rhetoric dovish due to economic uncertainty. Safe havens such as Gold benefit in such times, and XAU surged nearly $350, printing a new record high above $2,140.

Buyers couldn’t hold on to those gains and the price returned back down pretty fast, so that looked more like a spike. But buyers continue to remain in control, as Gold continues to make higher lows, indicating that the trend is still bullish, as shown on the daily chart. Moving averages have been doign a great job in holding the pripce during pullbacks, particularly the 50 SMA (yellow) on the daily chart.

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Don’t Sell the Dips in Gold, Wait for the Top

Since the start of this year, Gold has struggled to find a clear direction, as it bouncing between the support above $2,000 and the technical resistance around $2,060-70. However, buyers are still loking stronger, pushing the lows higher. Earlier this week, we decided to open a sell GOLD signal during the fall on Monday, as the price broke below the 50 daily SMA (yellow). But, buyers came back above the support zone and pushed the pirce back toward the resistance, so the break turned out to be a fakeout.

The prognosis for XAU/USD was more hopeful at the end of 2023 and the bullish trend appears to have paused right now, especially after the Federal Reserve indicated last week that it is not rushing to decrease interest rates. Yesterday we had several FOMC members repeating the same thing, postpoing the first rate cut toward May. Even for May, expectations for a rate decrease have dwindled as the Federal Reserve seeks solid proof that inflation would fall steadily to its 2% objective before acting. But, the uncertainty remins high in financial markets, with the conflicts, the economic slump in Europe and China and everythign else, which will keep Gold supported.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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