Technical Hurdles to Halt Rally?

GOLD, SILVER FORECAST:

GOLD, SILVER FORECAST: NEUTRAL

• Gold and Silver Both Face Technical Hurdles to Start the Week.
• US Data Continues, Will it Help Keep the Bullish Rally Alive?
• Markets are Pricing in Rate Cuts as Early as May 2024, Expect this to Continually Change as Data Releases Continue.
• To Learn More About Price Action,Chart PatternsandMoving Averages, Check out theDailyFX Education Series.

READ MORE: EUR/USD Price Forecast: Retracement Incoming? Catalyst Needed if Bulls are to Remain in Control

Gold prices enjoyed an excellent week up as much as 3.19% percent on Friday before a pullback in the US session saw the precious metal trading at $1981/oz at the time of writing.

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US INFLATION AND FED COMMENTS

Gold prices benefitted early in the week as US CPI came in much better than expected which saw market expectations for rate cuts in 2024 improve. Markets are now pricing in a rate cut for May 2024 at 47.9% up from 29.6% a week ago. The selloff in US Yields also helped while the ongoing uncertainty form the Middle East continues. This saw Gold breach the $1950 handle and print a daily high of $1970.91. This was followed by uncertainty on Wednesday before another miss by US data on Thursday gave Gold a further push toward the $2000/oz mark.

Source: CME FedWatch Tool

THE WEEK AHEAD: FEDERAL RESERVE MINUTES, FEDSPEAK AND US DATA

Heading into what is a shortened holiday week in the US and Gold faces risks from US data which could re-invigorate the US Dollar and drag Gold lower. Risk sentiment could also factor in as tensions in the Middle East show no signs of letting up either.

On the data front we have the release of the Federal Reserve Minutes which is unlikely to spring up any surprise. There have been positive signs since the previous Fed meeting, in terms of inflation and softening labor data in the US meaning any bullish rhetoric in the Fed minutes may be overlooked. There is also housing, durable goods orders and jobless claims numbers all due which could also see brief changes in sentiment toward the Dollar.

Taking all of the above into account any significant downside misses for the US and further labor market cooling could definitely see a further selloff in the US Dollar.

For all market-moving economic releases and events, see the DailyFX Calendar

TECHNICAL OUTLOOK AND FINAL THOUGHTS

Looking at the technical perspective and Gold is on course to close within a key range of resistance and given the selloff on Friday a further retracement could be possible in the early part of next week. The area between $1977-$1984 provides a host of confluences which continues to hold on a daily timeframe.

There is the Fib Retracement/discount level between 0.618-0.786 which is also in play and if the Friday high holds on Monday we could be in for a bit of a selloff to start the week. The only note of concern comes from looking at the moving averages as the 50-day MA is eyeing a cross above the 100-day MA in what would be a golden cross formation and a sign of buying momentum.

Key areas of support to pay attention come in around 1968.55, 1959.47 and 1950.00 may all provide support before this past week’s low print around 1931.65 comes into play.

Gold (XAU/USD) Daily Chart – November 17, 2023

Source: TradingView

Silver

Silver prices have also run into a key area of resistance and another test of the long-term descending trendline. This is the fourth touch of the descending trendline with every touch after the third usually increasing the likelihood of a break. However, the candlesticks are showing signs that the rally may be running out of steam as at one stage on Friday we had the daily candle trading as shooting star candle at some stage.

A retracement in the early part of the week in a similar vein to Gold cannot be ruled out. Initial support rests at 23.26 level where we also have the 100 and 200-day MAs resting and could prove to key for bullish continuation next week. If we are to break lower then we have support provided by the 20-day MA around the 23.00 mark and 50-day MA at the 22.68 mark.

Alternatively, if we do break above resistance of the descending trendline then we have the 24.33 level before the psychological 25.00 area comes into focus.

Key Levels to Keep an Eye On:

Support Levels

Resistance Levels

Silver (XAG/USD) Daily Chart – November 17, 2023

Source: TradingView

Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda