Gold Technical Analysis: Affected by Recovery of the Dollar

For four consecutive trading sessions, the XAU/USD gold price moved amid selling operations. This set off towards the support level of $1732 an ounce and settled around the $1740 level at the time of writing the analysis. Its losses came in the first place amid the recovery of the US dollar price, prior to the announcement of the content of the minutes of the last meeting of the Bank US Federal Reserve later this week.

The US dollar declined after the headline consumer price index inflation in the United States recorded a growth of 0.4% on a monthly basis in October, which is slower than the consensus estimate of 0.6%. Inflation rose by 7.7% according to the US Bureau of Labor Statistics, defying estimates. at 8.0%, a sharp slowdown from 8.2% in September. Accordingly, Thomas Flurry, Strategist at UBS Switzerland AG, says: “An unexpected slowdown in the US inflation rate boosted risk sentiment and hurt the US dollar. But we believe the markets went too far too soon, as the conditions were not yet right for a sustained decline in the dollar.”

The risk for those who want a stronger euro is that the prevailing trend of recent weeks has come to an abrupt end. Accordingly, the analyst adds, “We expect the dollar to recover some of the losses in the near term, because the continued decline – which we expect to occur later next year – will require stronger data showing that inflation is slowing and global trade is recovering.”

The dollar's reversal down in the wake of the release of US inflation on November 10 was stunning, but Valentin Marinov, forex analyst at Credit Agricole, said: “It seems that the worst of the US dollar sell-off has passed us and we expect the currency to gradually decline. And a broader recovery as it no longer looks as overbought and overvalued as it once was.” As for the US dollar, this week's trading will be short due to the Thanksgiving holiday, which begins on Thursday. Before that, a number of Fed governors will try to warn markets that the rate hike cycle is far from over, in order to try to ensure that the latest relief rush does not ease financial conditions.

XAU/USD gold price forecast today:

  • The continued recovery of the US dollar will harm the upward path of the XAU/USD gold price.
  • The bears' control over the trend may increase according to the performance on the daily chart below, in case the prices move towards the support levels of 1728 and 1710 dollars, respectively.
  • I still prefer selling gold from every ascending level, the return of stability above the $1775 resistance, which will support the bulls' control.
  • The price of gold does not await important and influential economic data today, but it will be affected by the price of the US dollar, in light of the statements of a number of US Federal Reserve officials.

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Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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