Gold prices continued to rise on Thursday after a significant rally the day before. This surge was fueled by the Federal Reserve’s dovish stance, which is seen as a contributing factor to the 2.4% increase, the largest one-day gains since October 13th.
Technical analysis suggests a bullish pattern forming on the daily chart, hinting at a potential end to the corrective phase from the new all-time high of $2141. The price has moved back above $2000 and has breached the pivotal barrier at $2037, which could lead to further positive short-term momentum. If the price closes above $2037, it could open the door to targets at $2057 and $2077.
The Federal Reserve’s announcement of a likely end to its tightening cycle and potential rate cuts in early 2024 has also contributed to the improved fundamentals for gold. Expectations for a total of 150 basis points easing next year are adding further support to the bullish sentiment.
In terms of immediate price action, the broken 10-day moving average at $2020 is seen as immediate support, with the 20-day moving average pivot at $2012 acting as an additional safeguard. As long as the price remains above $2000, the bias is expected to stay in favor of the bulls, with the metal set for a third straight weekly close above this level.
Additional insight:
The dovish stance of the Federal Reserve has created a positive environment for gold, as investors seek assets that can potentially provide a hedge against potential inflation and economic uncertainty. The anticipation of future rate cuts and easing measures is likely to keep gold prices supported in the near term. However, investors should also keep an eye on geopolitical events and any unexpected changes in monetary policy that could impact the precious metal’s price.
