GOLD | Setting Up for the Next Leg Higher?

2023년 11월 22일

XAUUSD ANALYSIS, PRICES, AND CHARTS
- US dollar weakness may be put on hold ahead of the Thanksgiving Holiday
- The technical set-up for gold looks positive.

The FOMC meeting minutes will provide more insight into the Fed's future plans. Markets believe that interest rates have reached their highest point and will be reduced next year. Chairman Powell has expressed confidence in the Fed's success in combating inflation. He also stated that the US central bank is prepared to raise interest rates if necessary. However, market expectations are for a 100 basis point decrease in US interest rates by the end of next year, with a 25 point cut expected at the May 2024 meeting.

With the market now backing the view that rates are not going any higher, the US dollar has been moving lower. The US dollar index has shed four points since the beginning of November and broken through a number of layers of support with ease. If the DXY is unable to reclaim the 200-day simple moving average, further losses are likely.

XAUUSD PRICE TECHNICAL ANALYSIS

In contrast to the US dollar, the technical outlook for gold looks positive. After selling off over the last three weeks as markets turned risk-on, the precious metal is now looking at the US interest rate space and pushing higher. Gold is trading above all three moving averages and is back above the 0.5% Fibonacci retracement level at $1,976. The recent $2,007/oz. high is the next target for bulls. Support is seen at $1,976/oz. ahead of $1,960/oz.

Financial markets as a whole are expected to quieten down after Wednesday as the US celebrates Thanksgiving Day on Thursday before the annual Black Friday event. This liquidity drain will weigh on volatility going into the weekend.