Weekly Outlook on Gold - 15 December 2023

Gold prices in Asian trade experienced a slight increase on Friday, surpassing key levels, following dovish signals from the Federal Reserve. The dollar and Treasury yields faced significant losses, prompting a rebound in the yellow metal from recent declines. The Fed's announcement of halting interest rate hikes and considering deeper cuts in 2024 led to market expectations of at least three rate cuts, with the first potentially occurring in March 2024.

Gold's appeal rose as the prospect of lower interest rates diminished the opportunity cost of investing in the precious metal, known for its lack of yield and dependency on sentiment and safe haven demand. Goldman Sachs anticipates a series of 25 basis point rate cuts in three consecutive meetings starting in March 2024.

Despite the optimism surrounding a soft landing for the U.S. economy, any signs of economic resilience, particularly in inflation and the labor market, could potentially delay the anticipated rate cuts by the Federal Reserve.

Technically, gold prices displayed a pullback on Thursday, recovering from a significant downturn that followed its all-time high at 64063 levels. On the daily timeframe, gold reveals a reversal from the 61.8% Fibonacci Retracement Levels, a critical point in its previous upward rally from 59490 to 64063.

Moreover, gold prices are currently trading above the Middle Bollinger Band and the 200-days Simple Moving Averages, supporting the overall bullish trend. Despite the long-term bullish sentiment, some volatility may be anticipated due to fundamental events impacting the market.

Both the momentum reading indicators, RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence), portray positive strength for the long term. This reinforces the recommendation for traders to consider holding buying positions or adding on dips for sustained gains. However, a cautious approach is advised, with a watchful eye on unfolding fundamental developments that could influence gold prices.

As present, the support levels for gold are identified at 61700 and 61400, while a key resistance barrier stands at 63300. Navigating these levels strategically will be pivotal for traders seeking to capitalize on potential opportunities in the gold market.

Important Key Levels: