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Market update: XAU/USD starts the week lower


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Gold eases after last week’s advance – quieter week on the economic calendar and FOMC minutes and reports of a new phase in the Israel-Hamas war present potential catalysts.

 

original-size.webpSource: Bloomberg

 

 Richard Snow | Analyst, DailyFX, Johannesburg | Publication date: Wednesday 22 November 2023 06:08

Gold eases after last week’s advance

Gold rose last week to end a two-week run of losses but Friday’s price action laid the ground for a potential move lover this week. Friday’s extended upper wick revealed the early sign of a possible pullback developing at the start of this week.

Price action now heads lower, trading down from the $1985 level, with he $1937 level next in view – as support. The $1937 level is significant as it roughly coincides with the 200-day simple moving average (SMA).

In recent trading days, a weaker dollar and easing US yields (Treasuries) have helped prop up gold prices after hitting a low on November 13th – the day before that softer US CPI print that inspired a dollar selloff.

The FOMC minutes offer up a potential catalyst for the precious metal this week as far as it affects the dollar. Other than that it is a relatively quiet week however, a new phase in the Israel-Hamas war could see gold find it feet once more.

Gold (XAU/USD) daily chart

 

original-size.webpSource: TradingView

Expected 30-day gold volatility continues to drop off a cliff after a brief period of consolidation. The longer this trend continues gold is unlikely to spike higher like we saw at the start of the conflict, but the metal is still in a favourable position to capitalize on further USD selling and lower US yields.

 

original-size.webpSource: TradingView

Silver encounters a challenge at channel resistance

Silver also posted an impressive week last week, rising up to channel resistance and the (less significant) 50% Fibonacci retracement. Nevertheless, the metal has started the week on the back foot, with a continued drop opening up $22.35 (38.2% Fib) as a possible level of support. A larger move sees channel support come into play at the 23.6% fib retracement, $20.52.

Silver (XAG/USD) weekly chart

 

original-size.webpSource: TradingView

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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