Gold prices are hovering just below the $2,000 barrier. Thus, it is trading near its highest level in more than two weeks. Gold is ending a two-day corrective slide as persistent weakness in the DXY as well as US Treasury yields offers new excitement to gold buyers. In this environment, investors’ focus is on the FOMC meeting minutes.
TDS: The door is open for some tactical drop!
Gold prices remain resilient even though more than a month has passed since the war in the Middle East. Macro headwinds are likely to increasingly work against the bears, according to economists at TD Securities. In this context, economists make the following assessment:
It’s been more than a month since the war in the Middle East sparked a massive short squeeze in precious metals markets. Crude Oil markets melted, erasing the risk premium associated with the war, and yet gold prices remained resilient, defying the traditional playbook of pointing to a declining risk premium. It was a bear trap! Finally, it’s time to come to the dark side. We now see risks that buying exhaustion may soon turn into selling activity. However, it may increasingly work against the bears under macro headwinds. However, the door is open for some tactical negativities.
All eyes on FOMC Minutes
cryptokoin.comAs you follow from , the US Dollar is at three-month lows against its main rivals. DXY extended its losing streak amid continued downward momentum in US Treasury yields. US Treasury yields are reeling on the pain of rising dovish Fed expectations. The latest economic data from the USA strengthens the bets that the Fed has completed its interest rate hike cycle. Meanwhile, the speeches of many Fed officials took place in a balanced tone. These also provide ground support for gold prices.
Markets are currently pricing in an over 50% chance that the Fed will cut interest rates by 25 basis points (bps) as early as May next year. This marks a dovish shift from the Fed’s ‘higher interest rate for longer’ view. This dovish trend has emerged as the key catalyst behind the sell-off in US Treasury yields and the US Dollar. It also helped gold prices stay above the psychological $1,950 level. The main event risk for Tuesday remains the release of FOMC meeting minutes, which will provide new clues about the Fed’s interest rate outlook. The Fed will announce the minutes at 22:00 GMT.
Gold price technical analysis: More room above!
Market analyst Dhwani Mehta analyzes the technical outlook for gold as follows. Gold price managed to close above the 21-day Simple Moving Average (SMA) at $1,975 on Monday. However, it fell below this level for a short time during the day. However, buyers are making a new attempt to regain the $2,000 level. This bullish signal provides new support to gold buyers. The B14 daily Relative Strength Index (RSI) is pointing north while above the middle line. It also shows there is more room upside.
If gold buyers find a strong foothold above the $2,000 threshold, an upward move is possible. In this case, the next level of resistance lies at $2,004, the November 3 high. Further up, it is possible that it could test multi-month highs of $2,009. On the other hand, gold sellers need to break the 21-day SMA at $1,975 to start a meaningful downtrend towards the $1,955-$1,950 region. An extended break below the latter could threaten the November 14 low at $1,944, followed by the ascending 200-day SMA at $1,938.
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