XAUUSD: Reaction to the supply zone at 1983!

The situation in the Middle East has impacted global markets, affecting commodities like the gold price on Comex. Despite optimism related to Chinese stimulus and expectations of the Federal Reserve maintaining interest rates, Comex gold faces challenges. The recent US CPI report indicated consumer inflation cooling faster than anticipated, while unemployment claims suggested a slowdown in the labor market. Market expectations of the Fed keeping interest rates unchanged in December 2023 and potential rate cuts in 2024 have pushed the yield on the US Treasury's 10-year note to a two-month low, benefiting gold. The decline in the US dollar since September and concerns about the conflict between Israel and Hamas, with potential impacts on the global economy, have contributed to supporting gold. The People's Bank of China's decision to keep borrowing rates low and inject liquidity into markets, along with Chinese regulators' commitment to further support the real estate sector, has boosted investor confidence and limited gold's safe-haven appeal.

The price of gold is currently undergoing a corrective downward phase after reaching a recent ten-day high of $1,993 on Friday, seeking a clear direction as a new week begins on Monday. The price is testing bearish commitments while hovering around the 21-day Simple Moving Average (SMA) at $1,975, having sharply retraced from multi-day highs on Friday. Failure to defend this level on a daily closing basis could trigger a renewed downtrend towards static support in the $1,955-$1,950 range. The 14-day Relative Strength Index (RSI) indicates the price is in an overbought condition, suggesting a potential downward movement. The immediate upside barrier is observed at the descending trendline resistance of $1,991, above which Friday’s high of $1,993 could be retested. The corrective decline in the gold price is influenced by risk sentiment, with the absence of significant US economic data, communication from the Federal Reserve (Fed). Risk sentiment is expected to be a crucial factor in gold price dynamics and is currently influenced by optimism regarding Chinese stimulus and positive corporate earnings reports from Japanese companies. Gold is currently in an interesting situation; at the time of writing, the price is reacting to the $1980 level after reaching a supply zone on the daily chart. It will be interesting to wait for operational confirmations, above $2000 to continue and attempt to ride the bullish trend or, conversely, wait for the price to fall below $1920-$1890 to assess potential declines towards the $1850 zone. A truly interesting pair to follow.

Comment:

The price of gold is testing the $2,000 threshold, driven by the persistent weakness of the US dollar and accommodative expectations from the Federal Reserve (Fed). If the price of gold surpasses $2,000, the next resistance could be at $2,004, followed by the November high of $2,009. Conversely, it could initiate a downtrend towards the $1,955-$1,950 range, posing a threat to the November 14 low at $1,944. The US dollar is declining to three-month lows, influenced by decreasing yields in US Treasury bonds due to growing expectations of a Fed interest rate cut. The November meeting Minutes of the Fed are anticipated for further insights into the US interest rate outlook. The price of gold is also supported by increased gold imports in India and the prospect of heightened purchases during the Diwali festive season. While existing home sales in the US could impact the dollar, the primary focus remains on the Fed Minutes for future perspectives on the gold market.