Gold prices (XAUUSD) are witnessing a gradual rise after rising over 0.4% during Wednesday’s trading session, driven by a weakening dollar and the anticipation that the Federal Reserve may be nearing the end of its policy tightening cycle. This increase follows a decline on Tuesday, which came after gold’s ascent to a record high on Monday. However, the price had subsequently fallen over 2% since that record peak as the dollar gained strength.
Recent U.S. job data, showing job openings falling to a two-and-a-half-year low, signals a cooling labour market. This has heightened focus on Friday’s non-farm payrolls for November, which may further clarify the Fed’s interest rate path.
The market anticipates a potential rate cut by March, with CME’s FedWatch Tool indicating a 60% probability.
Gold’s 4-Hour Technical Analysis:
On the 4-hour chart, gold prices are trading below the descending channel trading pattern following a successful break below the channel. Price action recently broke below the 20-SMA (green line) and 50-SMA (blue line) but trades above the 100-SMA (orange line), indicating potential short-term bearish sentiment. The RSI is trading flat after sharp declines.
Short-term trading opportunities could exist towards the resistance level at $2,038.80/ounce should the bulls sustain a push above the 50-SMA. A break above the initial resistance could confirm the bullish momentum, likely bringing the $2,052.00/ounce and $2,068/13/ounce support levels into play.
However, with the RSI trading flat, there is potential for a short-term pullback to lower levels. Therefore, short-term trading opportunities could arise towards the initial support at $2,010.43/ounce should the bears sustain a push lower. A break below the $2,010.43/ounce level would likely bring the $1,996.44/ounce and $1,980.80/ounce support levels into play in the short term.
Summary:
Gold prices are witnessing a gradual rise on Wednesday, driven by a weakening dollar and the anticipation that the Federal Reserve may be nearing the end of its policy tightening cycle.
Therefore, with the market firmly focused on the upcoming NFP report due on Friday, the short-term outlook may see resistance at $2,038.80/ounce and support at $2,010.43/ounce.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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