Key Insights
- Spot gold (XAU/USD) is trading at $1,978.36, showing signs of consolidation and fatigue after a 7.3% rally in October, with U.S. gold futures at $1,987.00.
- The market’s attention is firmly on the U.S. Federal Reserve’s upcoming policy announcement.
- Technical analysis shows that gold is trading above key moving averages but faces resistance at $1,987.00 and $2,009.00.
Gold prices entered November on soft footing as investors eye crucial events that could impact the precious metal’s trajectory. Spot gold recently traded around $1,980, down slightly on the day.
Last month, escalating Israel-Hamas tensions propelled prices above $2,000 on safe haven demand. However, gold now appears to be losing steam ahead of pivotal inputs.
All eyes are on this week’s Federal Reserve policy meeting conclusion. While rates are expected to remain steady, the Fed’s outlook will be closely parsed. Hawkish signals could pressure gold, while dovishness would offer respite.
Geopolitics remain crucial as well, given gold’s shelter appeal during conflicts. The Israel-Hamas clashes have already added a significant risk premium. Wider contagion could stoke further haven buying.
On the bearish side, contracting factory activity in China points to weakening demand from a top gold consumer. This compounds pressures from a precarious global economy.
Gold remains in wait-and-see mode heading into the Fed, said Ole Hansen, head of commodity strategy at Saxo Bank. While the long-term outlook remains positive, investors may need fresh drivers to spur the next leg higher.
Technical Analysis
In terms of technical analysis, the current daily price of gold at $1980.75 is trading above both the 200-day moving average of $1933.41 and the 50-day moving average of $1917.98, indicating a near-term bullish trend. However, the asset is currently encountering resistance around the $1987.00 mark, slightly above its current level, with the primary resistance located further up at $2009.00.
On the downside, robust support levels can be identified at $1930.64 and $1952.21. These combined technical indicators suggest a cautiously bullish sentiment. Traders should keep a watchful eye for a potential breakout above the minor resistance as a confirmation of upward momentum or a retreat towards support levels, which might indicate a bearish reversal.