GOLD | Cautious Above $2000 on Thin, Holiday Affected Trading

24 בנוב׳ 2023

XAUUSD ANALYSIS
- Gold expected to underwhelm this Thanksgiving weekend amid thin trading
- XAUUSD reveals an aversion to trading above $2000 as ceasefire tests safe haven appeal
- USD and Treasury yields remain a factor as markets lower expectations of rate cuts next year

XAUUSD EXPECTED TO UNDERWHELM THIS THANKSGIVING WEEKEND
Gold prices rose in early trading but failed to capitalize on the move as activity is expected to remain light this Thanksgiving weekend. Gold has struggled to surpass the $2000 level, with two unsuccessful attempts at reaching $2010.

Yesterday, a slight increase in the dollar weighed on gold prices after initial jobless claims for November fell short of expectations. Despite weaker US fundamental data in recent weeks, the labor market remains strong. The ceasefire between Israel and Hamas is now a major concern for gold, as it could lead to further agreements and aid in the affected areas.

The weekly chart highlights the recent difficulty to surpass the $2010 level but still reveals the bullish trend remains intact. However, the recent swing low and the inability to mark a higher high, hints at a period of potential consolidation as the RSI heads lower.

USD AND YIELDS TO PLAY FURTHER ROLE AFTER MARKETS LOWER RATE CUT EXPECTATIONS FOR 2024
Following lower-than-expected US CPI data, the US dollar and Treasury yields declined, leading to speculation about the timing and scale of rate cuts in the coming year. Initially, market expectations were as high as 100 basis points worth of hikes, despite the Fed's forecast of 50 bps. However, stronger labor market data has tempered those expectations to a 25 bps cut, resulting in a projected 85 bps by the end of next year. Gold typically moves inversely with the dollar and US yields, which represent the opportunity cost of holding the non-interest-bearing metal.

FORECAST XAUUSD

Over the past five years, gold has seen an average gain of 2.7% from Thanksgiving to December 31. In addition to seasonal trading, geopolitical tensions, especially developments in the Middle East, and the possibility of further banking crises in the US and elsewhere are fundamental drivers of support for gold. This precious grade has momentum to maintain prices above $2,000/ounce for the remainder of this year.

However, precious metals are lacking a catalyst to increase prices. The gold market is in a positive macro mode and is growing; however, there is no strong buy signal. It is possible that the market is in a spiraling and volatile model with a narrow range and is waiting for a new catalyst to break out.