By Samir Al Khoury
It appears that the bullish trend for gold is set to continue in the upcoming phase, influenced by various factors. Among the most crucial are:
The inverse relationship between the US dollar index, measuring the dollar’s performance against a basket of six major foreign currencies, and gold is pivotal. The US dollar’s weakness, exacerbated after breaking the 103-point support level to a new low of 102.47 today (its lowest since August 11, 2023), is attributed to a slowdown in consumer and producer price indices, along with job data hinting at a potential end to the US Federal Reserve’s monetary tightening cycle. Markets anticipate a stabilization of interest rates at the Federal Open Market Committee meeting on December 13, 2023, ranging from 5.25% to 5.50%. Additionally, there’s a growing expectation of a 43% rate cut in March 2024 and a cumulative 100 basis points cut in 2024.
Other factors contributing to gold’s positive momentum include the decline in various-term US Treasury bond yields, making gold more attractive as it offers no returns for investors. The possibility of an economic recession in major developed countries, geopolitical tensions in the Middle East, and global economic uncertainty further fuel demand for gold as a safe haven.
Today, the price of gold reached $2,052, its highest since May 5, 2023. Technical indicators suggest potential support for gold prices:
Regularity in the 20-, 50-, and 200-day moving averages, with a golden crossover approaching between the 50-day moving average at approximately $1,941 and the 200-day moving average at approximately $1,943. A breakthrough here could trigger further rises.
The Relative Strength Index (RSI) at 70 points, indicating the overbought area and signalling upward momentum for gold.
The MACD indicator in blue is above the SIGNAL LINE in orange and in the positive zone, providing positive momentum for gold.
Markets eagerly await the release of the Core Personal Consumption Expenditures (PCE) price index tomorrow, the Fed’s preferred inflation indicator, with expectations of a 3.5% annual basis, slightly lower than the previous 3.7%. A decline in this indicator would likely contribute to upward momentum for gold.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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