Gold Week Ahead: $147 Drop, Key Levels, and Critical Economic Events

Gold (XAU/USD) has faced significant pressure, trading at $2,563.22 as of November 17, 2024, marking a steep decline from its monthly high of $2,710.48.

This $147 drop reflects a mix of fundamental and technical factors reshaping the market landscape.

The strengthening U.S. dollar, measured by the DXY index, is up for its largest weekly gain in over a month, making gold pricier for holders of other currencies. Additionally, U.S. Treasury yields climbed further after robust retail sales data indicated economic resilience. These factors collectively reduce gold’s appeal as a non-yielding asset.

Fed Chair Jerome Powell’s recent statement emphasized no rush to lower interest rates, intensifying bearish sentiment in gold markets. Market expectations for a December rate cut have dropped from 83% to 62%, according to the CME FedWatch tool.

Technical Analysis: Gold’s Support and Resistance Levels

Gold’s bearish momentum remains intact, with critical technical levels providing traders with insights into potential future price action.

• Resistance Levels:
  • $2,606.69: This aligns with the 50-day Exponential Moving Average (EMA), a critical barrier for upward movement.
  • $2,652.27 and $2,710.48: Additional resistance zones reflecting previous highs.
• Support Levels:
  • $2,550.03: Key immediate support, a breach could lead to sharper declines.
  • $2,506.98 and $2,471.54: Historical support zones, critical for long-term sentiment.
• Momentum Indicators:
  The Relative Strength Index (RSI) stands at 33.68, suggesting oversold conditions. However, the absence of a confirmed rebound keeps traders cautious about initiating new long positions.

Weekly Outlook: Economic Events to Watch

Upcoming forex events and economic data could further impact gold prices:

• Tuesday, Nov 19: U.S. Building Permits (forecast: 1.44M).
• Wednesday, Nov 20: Crude Oil Inventories (+2.1M expected).
• Thursday, Nov 21: U.S. Unemployment Claims (forecast: 220K) and Philly Fed Manufacturing Index (forecast: 6.3).
• Friday, Nov 22: Flash Manufacturing PMI (48.5) and Services PMI (55.0).

These events may shift market sentiment, influencing both the dollar’s strength and gold’s trajectory.

Key Takeaways for Traders

• Bearish Sentiment Dominates: Gold needs to reclaim $2,606.69 to restore bullish interest.
• RSI Signals Caution: Oversold conditions may precede a rebound, but further downside cannot be ruled out.
• Macro Factors at Play: Monitor U.S. economic data and Fed developments for potential shifts in market dynamics.

Gold’s downward trajectory underscores the importance of combining technical insights with macroeconomic trends. Traders should adopt a cautious stance, focusing on key support and resistance levels while remaining alert to broader market shifts.