{"id":95127,"date":"2024-11-19T16:42:00","date_gmt":"2024-11-19T14:42:00","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=95127"},"modified":"2024-11-19T16:42:01","modified_gmt":"2024-11-19T14:42:01","slug":"gold-outlook-golds-bearish-movement-halted","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/th\/gold-outlook-golds-bearish-movement-halted\/","title":{"rendered":"Gold Outlook: Gold\u2019s bearish movement halted"},"content":{"rendered":"

Compare to last report<\/a> , gold\u2019s price regained its confidence yesterday as it rose after being for two weeks in the reds. \u00a0In today\u2019s report we intend to have a look at the revival of the negative correlation of the USD with gold\u2019s price, geopolitical issues that could affect gold\u2019s price and the Fed\u2019s stance, all on a fundamental level for the gold market. For a rounder view conclude the report with a technical analysis of gold\u2019s daily chart. \u00a0\u00a0\u00a0<\/p>\n\n\n\n

The negative correlation of gold with the USD in full swing<\/strong><\/strong><\/h2>\n\n\n\n

Gold\u2019s negative correlation with the USD seems to be in full swing over the past week, as gold\u2019s price practically retreat until Friday, while as the current week started gold\u2019s price seems to have regained its confidence to climb higher. On the flip side USD bulls dominated the greenback\u2019s direction over the past week, while they took a break as the week begun allowing for gold\u2019s price to rise. <\/p>\n\n\n\n

Overall we see the case for the negative correlation of the two trading instruments to be maintained over the coming week, hence should the USD retreat further we may see gold\u2019s price edging higher. We note that there are very few high impact financial releases on the calendar in the coming days, hence we expect fundamentals to lead the way for golds\u2019 price. <\/p>\n\n\n\n

On a fundamental level, we note the Trump presidency as a factor which has to be priced in by traders, in an effort to expect the unexpected, given the US President elect\u2019s character. Also we note that the rise of gold\u2019s price was escorted by a drop of US bond yields, in a signal that the attractiveness of US bond as an alternative safe haven investment to gold may drop, thus allowing for funds to be diverted towards investments in the precious metal. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n\n\n\n

Fed\u2019s stance could weigh on gold\u2019s price<\/strong><\/h2>\n\n\n\n

Over the past week, we saw the chances of the Fed\u2019s stance affecting gold\u2019s price increasing. On a monetary level, we note that Fed Chairman Powell and a number of other Fed policymakers made the case for an easing of the Fed\u2019s rate cutting path and the market\u2019s expectations for a 25 basis points rate in the December meeting eased over the week with Fed Fund Futures implying a 52% probability for such a scenario materialising. <\/p>\n\n\n\n

The Fed\u2019s cautiousness towards cutting rates is understandable given that October inflation data showed a persistence of inflationary pressures in the US economy, while on a fiscal level, the Trump economic policies and intentions of imposing trade tariffs, tightening immigration and deepening the deficit hence also raising national debt possibly, may rejuvenate inflationary pressures in the US economy. <\/p>\n\n\n\n

Should more Fed policymakers highlight or imply the need to slow down the reduction of the interest rates, we may see the USD being supported on a monetary level which in turn could weigh on the precious metal.<\/p>\n\n\n\n

Escalating geopolitical tensions could support gold\u2019s price<\/strong> \u00a0<\/strong> <\/h2>\n\n\n\n

The war in Ukraine may be the main geopolitical issue that could create shockwaves for gold\u2019s price. The war has completed 1000 days and in the past few days has escalated. The first move was the green light of the US Government under incumbent President Biden to allow Kyiv to use US made long range missiles ATACMS. Russia had repeatedly warned that such a move would constitute a major escalation in the war. <\/p>\n\n\n\n

It should be noted that Russia proceeded with a massive air strike hitting the Ukrainian power grid, yesterday. Its characteristic that according to Associated Press, Russian President Vladimir Putin today signed a revised nuclear doctrine declaring that a conventional attack on Russia by any nation that is supported by a nuclear power will be considered a joint attack on his country. <\/p>\n\n\n\n

In the big picture, Russia has now lowered the threshold at which it would use its nuclear arsenal and thus the possibility of a nuclear strike tends to increase in general. Please be advised that according to Ukrainian media reports, Ukraine did use ATACMS to hit Russia for the first time today. <\/p>\n\n\n\n

Overall we see the case for further escalation ahead, which in turn could intensify market uncertainty for the possible effects of the war in Ukraine and where such an escalation could lead to. Gold may experience further safe haven inflows in such a scenario as more investors may allocate a larger part of their investment portfolio in safe havens such as gold.<\/p>\n\n\n\n

Gold Technical Analysis<\/strong><\/h2>\n\n\n\n

XAUUSD 4H Chart<\/strong><\/strong><\/h3>\n\n\n\n
\"Chart<\/figure>\n\n\n\n