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Gold Analysis: Gains May Stop

  • The US dollar index rose sharply, driven by a stronger-than-expected US CPI report, which signaled that the Federal Reserve will not be in a hurry to cut US interest rates in the coming months.
  • Therefore gold prices have sold off from their recent record highs, falling to $2319 an ounce.
  • Recently, its strongest gains ever reached the $2365 resistance level, and the gold price is now stabilizing around $2330 at the time of writing the analysis.

Gold Analysis Today 11/4: Gains May Stop (graph)

According to the results of the economic calendar data, in March, US inflation accelerated for the second consecutive month to 3.5%, slightly exceeding market expectations of 3.4%, while the core rate remained constant at 3.8%, defying market expectations of a slight slowdown to 3.7%. On a monthly basis, both indices rose by 0.4%, also beating expectations of 0.3%. Additionally, the March report follows last week's labor market figures, which showed the largest increase in US non-farm payrolls in 10 months.

Overall, markets are now expecting approximately 50 basis points in total easing from the Fed this year, a slight decline from the previous forecast of 60 basis points. Moreover, bets on a June interest rate cut were completely erased, dragging consensus for the central bank's first cut to September.

In another development affecting the gold market, the yield on the 10-year US Treasury bond rose to the 4.5% mark on Wednesday, 20 basis points above the session lows, to its highest level in six months after hotter-than-expected inflation readings dampened expectations of imminent rate cuts by the Fed. Generally, the recent economic data has provided further evidence that US price growth has stubbornly plateaued at high levels, bolstering the Fed's case for delaying the start of rate cuts and easing monetary policy to a lesser extent. As a result, money futures show that markets have completely wiped-out bets on a June rate cut, pushing back the consensus on the central bank's first cut to September.

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    Gold Price Forecast and Analysis Today:

    Despite the recent selling operations, the general trend of the price of gold remains sound and strong. Obviously, the gold market finds other strength factors represented in the increasing demand for buying gold as a safe haven with the expansion of global geopolitical tensions, in addition to more record central bank purchases of gold for hedging. Therefore, we expect that the decline in the price of gold will be temporary and that the trend will remain upward as long as its strength factors continue. Technically, the closest resistance levels to the gold trend are $2,355 and $2,400, respectively, and according to the performance on the daily chart, no actual reversal of the gold trend will occur without breaching the psychological level of $2,000 per ounce.

    Today, the price of gold will be affected by the European Central Bank’s announcement, the extent of investors’ appetite for risk or not, and the continued reaction from the recent US inflation announcement.

    Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out. 

    Mahmoud Abdallah
    About 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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