Pressures on the US dollar is still helping gold prices XAU/USD to rebound higher and maintain the psychological resistance of $2,000 per ounce. Technically, the gains of the rebound this week reached the resistance level of $2,047 per ounce. Consequently, financial markets have been greatly affected by the change in the US central bank's policy in considering starting to cut interest rates next year. According to market performance, US stock indices in Wall Street have risen and are approaching their all-time highs amid hopes that the Bank of Japan's moves to keep interest rates easy for investors will be a preview for the rest of the world. According to trading, the S&P 500 index rose 0.4%, or only 0.8% less than the record it set nearly two years ago. Also, the Dow Jones Industrial Average rose 198 points, or 0.5%, from its all-time high. Similarly, the Nasdaq Composite Index rose 0.4%.
On the individual stock performance front, Enphase Energy stock jumped 6.9% after the manufacturer of microinverters for the solar industry informed employees that it will cut 10% of its global workforce and make other streamlined changes. At the same time, shares of oil and gas companies also helped push the market higher after crude oil prices rose by approximately 1.7% to recover from some of the sharp declines witnessed in recent months.
Overseas stock markets showed mixed performance amid mostly quiet trading. On the other hand, Japan was an exception, with the Nikkei 225 index jumping by 1.4% after the Bank of Japan decided to keep the benchmark interest rate below zero. Clearly, it took this decision to encourage more borrowing and spending.
Overall, the S&P 500 is up about 15% since late October, with Wall Street hoping for a similar approach. With inflation falling from its peak two summers ago and the economy continuing to grow, expectations are growing that the Fed in 2024 will move away from its campaign to raise US interest rates significantly. For his part, Federal Reserve Chairman Jerome Powell appeared to give a signal to such hopes last week when he did not strongly push against traders' expectations for several interest rate cuts next year. Generally, wall Street markets like low interest rates because they give a boost to investment prices and relieve pressure on the economy and financial system.
Furthermore, the hope is that the US Federal Reserve can achieve what was seen as a near-impossible cakewalk, by first controlling inflation through high interest rates and then lowering interest rates before pushing the economy into recession. Surely, the big moves in Wall Street indices make critics say that the rise seems exaggerated, and that stocks now look expensive compared to the profits that companies are making. For their part, more cautious investors also say that the number of interest rate cuts that traders expect for 2024 seems unlikely unless the US economy falls into a recession.
Meanwhile, Some Fed officials have appeared more cautious about the possibility of lowering interest rates since Powell's comments last week. On Friday, for example, the head of the Federal Reserve Bank of New York said it was “too early to think” about whether to cut interest rates in March. However, markets were enthusiastic, with the S&P 500 coming off its seventh straight week of wins for the longest such streak in six years. In a demonstration of how voracious buyers are, clients at Bank of America pumped $6.4 billion more into US stocks last week than they pulled out.
Gold Price Forecast and Analysis Today:
There is no change in my technical view that the stability of the gold price (XAU/USD) above the psychological resistance of $2000 per ounce still supports the strength of the general upward trend. Thus, the continued decline in the price of the US dollar will give the price of gold opportunities for more strength, and therefore the resistance levels for gold will be 2045, 2070, and 2085 dollars, respectively. Clearly, this is sufficient at the same time to push the technical indicators towards strong levels of saturation with buying. Therefore, selling operations to take profits are expected at any time. On the other hand, according to the performance on the daily chart, a return to the support level of $1985 per ounce will be important to start the bears’ shift in a downward direction.
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