Monday witnessed a subtle decline in the gold spot price (XAUUSD) as the US Dollar flexed its muscles in anticipation of a crucial US inflation report later this week. Market sentiment, fuelled by the Federal Reserve’s hawkish stance on interest rates, propelled the dollar further. Fed Governor Christopher Waller’s recent remarks advocating for rate cut delays added to this momentum, as he suggested pushing the timeline out for a few months to ensure the sustainable achievement of its inflation target.
Concurrently, persistent geopolitical tensions in the Middle East sustained demand for safe-haven assets like gold. As the week progresses, all eyes are set on Thursday’s release of the PCE Price Index, which could significantly influence market dynamics. It serves as the Federal Reserve’s preferred inflation measure and could be the triggering event for future price action.
Technical
On the 4H chart, an ascending channel has formed, with the crossing of the 25-SMA (green line) above the 100-SMA (orange line) confirming a bullish tilt in the shorter term. A recent consolidation range formed between $2,020.68/ounce and $2,031.35/ounce, close to the Fibonacci midpoint and golden ratio, respectively. However, a breakout has occurred, and the price action is currently retesting the resistance of the prior range near the 61.8% Fibonacci golden ratio of $2,029.87/ounce, where the future price action could be decided.
If this support holds in the upcoming session, it could create a pivot point to confirm the breakout. Resistance at $2,040.74/ounce presents the first hurdle to the upside, where clearance could open a path toward $2,047.81/ounce and $2,053.60/ounce in the week’s latter sessions.
Conversely, if support at $2,029.87/ounce fails to hold, it could signal an unsustainable breakout, with the bears taking the upper hand. A move toward the Fibonacci midpoint at $2,021.19/ounce could trigger a channel breakdown, bringing the 50-SMA (blue line) near $2,014.50/ounce into play as a potential pivot point to retrace the breakdown.
Summary
The gold spot price has been influenced by familiar factors, as a strengthening dollar and geopolitical tensions in the Middle East created a tug-of-war between the bulls and bears. Support at $2,029.87/ounce could be worth watching in the upcoming session, as it could signal the strength of the recent breakout from the prior consolidation range.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, 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.
