Analysis of the Downward Trend in Gold Prices This WeekGold prices remained stable above $2,600 in the past week, primarily supported by increasing geopolitical tensions. However, after Donald Trump's victory in the U.S. presidential election, gold still faced pressure to limit its price increase, as the U.S. dollar is expected to be supported by Trump's win.
Regarding gold's recent recovery, after the release of the U.S. Personal Consumption Expenditures (PCE) data earlier this week, which met expectations, market anticipation for a Federal Reserve rate cut in December has risen, driving gold prices higher. Currently, the market is pricing in about a 66% chance of the Fed cutting interest rates by 25 basis points in December, a significant increase from just over 50% a week ago.
Geopolitical tensions in Europe, caused by Russia's missile attack on Ukraine, have also provided support for safe-haven assets like gold. The Israeli military announced on Thursday that their air force had struck a facility in southern Lebanon used by Hezbollah to store medium-range missiles, as both sides accused each other of violating the ceasefire agreement. On Thursday, Russia launched its second major attack this month on Ukraine's energy infrastructure, causing widespread power outages in the country.
Gold OANDA:XAUUSD is generally seen as a safe investment during periods of economic and geopolitical instability.
Gold prices have dropped about 3% this month, hitting a two-month low on November 14. This is mainly due to the strengthening U.S. Dollar since Trump's election, and his tariff policies, which are seen as likely to push inflation higher, thus slowing down the Federal Reserve’s rate-cutting cycle.
Next week, the U.S. will release key economic data, including job openings, ADP employment reports, and non-farm payrolls, which could provide direction on the Federal Reserve's policy outlook.
Important Economic Data to Watch Next Week
Monday: ISM Manufacturing PMI
Wednesday: ADP Employment Report, ISM Services PMI, Federal Reserve Chairman Jerome Powell will participate in a panel discussion at the New York Times DealBook Summit
Thursday: Weekly Jobless Claims
Friday: U.S. Non-Farm Payrolls Report, University of Michigan Preliminary Consumer Sentiment
Technical Outlook for XAUUSD (Gold Price)
Gold is attempting to recover but remains limited by the 50% Fibonacci level and the EMA21, as pointed out in yesterday's publication. In terms of overall structure, gold still leans towards a bearish outlook, with the main trend indicated by the price channel (a) and resistance from the EMA21. The Relative Strength Index (RSI) has also not yet surpassed the 50 level. Therefore, in terms of trend and momentum, gold is more likely to face downward pressure rather than rise.
As long as gold stays within the price channel (a), it does not meet the technical conditions for a long-term price increase, so any rallies should be viewed as short-term recoveries.
In the short term, if gold drops below the 0.618% Fibonacci retracement level, the next target for a decline would be around the $2,600 level.
In conclusion, the technical outlook for gold on the daily chart is bearish, with the following key levels to watch:
Support: $2,634 – $2,606 – $2,600
Resistance: $2,663 – $2,693
However, traders must note that in the context of geopolitical conflicts, technical structures can be broken very quickly due to sudden, impactful events. Therefore, the risk will be higher in the short term.
This concludes the article. Henry wishes for a healthy, joyful, and happy weekend.
