Technical Analysis of Gold

Yesterday, we followed the US Federal Reserve’s interest rate decision, which was in line with expectations, keeping interest rates unchanged at their previous levels within the range of 3.75% to 4.0%.

However, the key point is that future decisions will depend on economic data and the trajectory of inflation. Consequently, the meeting did not bring about any significant changes in gold price movements, and gold continued to trade within its downtrend, taking the following points into consideration:

  • Gold’s rise for the third consecutive day during yesterday’s session has not yet been sufficient to break above the descending trendline resistance.
  • Gold remained below a previous support zone, as shown on the attached chart, near $4,080.
  • Gold also continued to trade below the resistance formed by the 100-period moving average.

Therefore, we do not expect a change in gold’s trend as long as it continues to trade below the resistance zone between $4,080 and $4,100.

XAUUSD, Timeframe: 4-hour, Indicator: SMA 100XAUUSD, Timeframe: 4-hour, Indicator: SMA 100

Fundamental Analysis of Gold

Geopolitical tensions and their potentially negative impact on energy prices, on the one hand, and technology companies’ earnings, on the other, are factors weighing on gold prices. Accordingly, the following key factors should be monitored, as they are expected to influence price movements:

  • Monitor inflation data and the possibility of monetary policy tightening being resumed at the upcoming December meeting.
  • Monitor the risks of war and oil supply from the Middle East.
  • Monitor long-term government bond yields, particularly amid growing bets on a resumption of interest rate hikes in December.

Ultimately, gold remains in a downtrend. The technical principle states that a trend remains in place until there is evidence to the contrary.