After a triumphant three-week ascent, the Gold Spot Price (XAUUSD) recently faced a notable shift in 2024. A dip was prompted by the Spot Price’s struggle against a robust Greenback as traders recalibrated expectations for Federal Reserve monetary policy.
Amidst dwindling bets on a rate cut as early as March, from nearly 90% late last year to the current 67%, the U.S. dollar flexed its resilience. Despite this, markets still factor in a substantial 140 basis points of rate cuts in 2024, surpassing the Fed’s more conservative projection of 75 bps.
The ongoing tug-of-war between the Greenback and the precious metal hinges on forthcoming U.S. inflation data – a key determinant for gauging future monetary policy. As traders eagerly await this economic compass, it remains to be seen whether the Federal Reserve will yield to inflationary pressures or maintain its cautious stance, leaving the trajectory of the Gold Spot Price hanging in the balance.
Technical
The Gold Spot Price finds itself intricately entangled in a price battle against the Greenback, as revealed by its fluctuation around the 100-day moving average.
Amidst this tussle, a notable support level materialized at $1973.03 per ounce, coinciding with oversold Relative Strength Index (RSI) conditions. Buoyed by this foundation, the spot price surged past the 100-day moving average and psychological $2000 per ounce mark, only to encounter resistance at $2088.43 per ounce, where overbought RSI conditions prevailed.
The subsequent downturn witnessed the spot price slipping beneath the 100-day moving average yet finding a temporary refuge at the 61.80% Fibonacci Retracement Golden Ratio, marked by declining downside volume and oversold RSI conditions. This juncture now holds pivotal importance; if it solidifies as an intermediate support, the ongoing reversal might propel the spot price to retest $2088.43 per ounce if upside volumes are sustained. Conversely, a substantial breakdown below the Golden Ratio could usher in downside pressure, potentially revisiting the $1973.03 per ounce level.
Summary
Amidst the Gold Spot Price’s battle with the Greenback, the focus centres on the pivotal 61.80% Fibonacci Retracement Golden Ratio. This juncture potentially holds the key to the yellow metal’s trajectory. Market participants anxiously await cues to discern whether the precious metal succumbs to inflationary pressures or holds its ground amid cautious monetary policy.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
