A good start! On Monday (November 27th), as the European market entered, spot gold maintained its upward trend. Earlier, gold prices broke through $2010, breaking a six-month high to $2018. There were no major stimulus factors in the fundamentals, but last week the Federal Reserve ended interest rate hikes and continued into a new week. The US dollar remained weak, and market focus shifted to this week's US economic data and the speech of Federal Reserve Chairman Powell.
Gold prices climbed to a six month high on Monday, helped by the weakening of the US dollar and market bets that the Federal Reserve has ended its interest rate hike cycle, while market focus shifted to the US inflation data to be released later this week.
Spot gold continued to climb within the day, breaking through the 2010 US dollar and reaching a maximum of 2018 US dollars, the highest level since May 16th.
In the Asia Pacific market, gold broke through the recent high of $2010, and bullish sentiment continued to prevail against the backdrop of expected interest rate cuts and weak US economic data. This expectation leads to a decrease in actual returns and a weakening of the US dollar, which is conducive to an increase in gold prices.
The Federal Reserve has now ended its tightening cycle, and data may further deteriorate. Therefore, on a forward-looking basis, gold should continue to be supported, with a historical high of 2078 being a natural target.
Technically speaking, Forexlive analysts point out that on the daily chart, gold is expected to test above the recent high of $2010. However, due to weak US economic data, the bullish bias of gold continues to be supported by expectations of interest rate cuts. The bullish target should be the historical high area around $2076. On the other hand, bears will require some key downward breakthroughs to enter, as there is no resistance before historical highs.
Forexlive stated that on the 4-hour chart, it can be seen that bulls continue to rely on the trend line, while the red 21 period moving average level is a historical high positioning. The intraday trend is higher than the differentiation of the MACD indicator, which shows a signal of weakened motility, followed by a usually pullback or reversal. In this situation, it is best for buyers to wait for a pullback to the trend line, where they will have a better risk return setting. On the other hand, bears hope to see prices fall below the support level of $1985 and flock to enter.
Forexlive believes that on a 1-hour chart, it is possible to observe more closely the recent price trends near high points. It can be expected that some aggressive buyers have already flooded into this area, with lower risks than this area. The goal is to expand the upward space again, but the risk of returns will be greater. On the contrary, some radical sellers may want to immediately flood in when prices fall below the trend line, aiming for a pullback to the trend line.
"The current factor affecting gold prices is the recent weak data leading to a decline in the US dollar," said Kyle Rodda, a financial market analyst at Capital.com.
"This week, the United States will release economic data, including growth and inflation data, which will determine whether gold prices can remain above $2000," Rodda added.
The US dollar index fell slightly by 0.1%, not far from the two month low it hit last week, making gold less expensive for holders of other currencies.
The market focus is now shifting towards the revised US third quarter GDP data scheduled for Wednesday, as well as the US personal consumption expenditure price index released on Thursday.
Recent data shows signs of slowing inflation in the United States, which strengthens market expectations that the Federal Reserve may start loosening monetary policy earlier than expected.
According to the Chicago Mercantile Exchange's FedWatch tool, traders generally expect the Federal Reserve to maintain interest rates unchanged in December, and the likelihood of a rate cut in May next year is expected to be about 60%.
Low interest rates lower the opportunity cost of holding interest free gold.
Spot gold may expand its upward trend to the range of $2026-2032 per ounce, as gold prices have broken through the resistance level of $1999.
Looking ahead to this week, tomorrow investors will see the US Consumer Confidence Report. On Thursday, the latest reports on the number of US unemployment claims and individual consumer spending will be released. On Friday, the week will end with the US ISM Manufacturing Purchasing Managers Index, which was significantly lower than expected the previous time. Weak data may boost gold prices, while strong data may lead to a decline in gold prices.
