Gold Technical Analysis | XAUUSD hesitates while USD rallies

BY Janne Muta

|January 2, 2024

Gold Technical Analysis - Gold hesitates as the USD rallies, with a bearish trend last week. Traders are closely watching US economic reports for clues on policy directions. Key data include the US ISM Manufacturing PMI and JOLTS job openings, both due tomorrow.

The PMI, indicating sector contraction, might rise slightly, while job openings are expected to marginally increase after recent lows. Additionally, the FOMC meeting minutes releasing on Wednesday could shed light on the Fed's rate plans, amidst moderate job gains and persistent inflation concerns.

Markets expect to see five 25 bp rate cuts in 2024, starting possibly in March. The week concludes with the U.S. Non-Farm Payrolls report, forecasted to show a modest job increase (+168K).

Summary of This Gold Technical Analysis Report:

  • In the weekly chart, gold shows weakness with a rejection candle. A break below 2053.50 could lead to 2030 and 2020 levels. Above 2053.50, a rise to 2090 is possible. Despite this, the upward trend in moving averages suggests a long-term upward bias remains.
  • The daily chart's stochastic oscillator reflects a loss of momentum. Continuation of this trend could see the 2047.88 support level tested, with potential further decline to 2015.60. The alignment of SMA(50) with the rising trend line adds significance, but bearish trends in higher timeframes indicate possible lower trading levels, providing mixed signals for gold.
  • The intraday (8h) chart shows gold hesitating after exiting a bullish trend channel. A lower reactionary high below 2088.44 and break below 2058 (if they materialise) would suggest a bearish bias. The nearest support is at 2047.88. Despite recent intraday volatility, the SMA(20) above the SMA(50) implies an overall upward trend.

Read the full gold technical analysis report below.

Gold Technical Analysis

Gold Technical Analysis, Weekly Chart

Weekly Gold Technical Analysis

Last week, gold formed a weekly rejection candle, signalling weakness. If the market decisively breaks below last week's low of 2053.50, we might see a move towards 2030, and possibly down to 2020 if the weakness persists.

On the other hand, if the price stays above 2053.50, a rise to 2090 could occur. The moving averages are still trending upwards, and with the market trading above them, the SMA-based gold technical analysis suggests that the market is in a long-term uptrend.

Gold Technical Analysis, Daily Chart

Daily Gold Technical Analysis

The stochastic oscillator indicates that the market has lost momentum over the past three trading days. If this weakness continues, the 2047.88 support level might be tested. Below this, the next support level is at 2015.60. It's worth noting how the rising trend line support coincides with these levels soon.

Currently, the SMA(50) is closely aligned with the rising trend line, adding to its significance. The bearish signs in the higher timeframe (weekly) imply that the market could trade lower and may test some of these levels. The nearest major resistance level is the December high at 2146.

Gold Technical Analysis, 8h Chart

Intraday Gold Technical Analysis

In the 8-hour chart, gold hesitates after dropping below a bullish trend channel. If the market forms a lower reactionary high below 2088.44 and then breaks the 2058 level, this would confirm a bearish bias. However, it's important to note that the nearest support level is relatively close at 2047.88.

Lately, the SMA(20) has been providing trading opportunities for intraday traders, but these bounces from the moving average have not yet translated into significant price swings. Moving average-based gold technical analysis shows that the market still maintains an upward bias, with the SMA(20) trading above the SMA(50).

Trader sentiment chart (Gold technical analysis)

Client sentiment analysis

42% of clients trading Gold are holding long positions, while 58% are holding short positions. Client sentiment data is being provided by TIO Markets Ltd.

It’s good to remember that retail client trading sentiment is a contrarian indicator as most retail traders are on average trading against market price trends. This is why experienced traders tend to trade against the retail client sentiment. You can follow the TIOmarkets client sentiment live on our Forex dashboard.

The next key risk events impacting this market:

  • FOMC Member Barkin Speaks
  • ISM Manufacturing PMI
  • JOLTS Job Openings
  • ISM Manufacturing Prices
  • FOMC Meeting Minutes
  • German Prelim CPI m/m
  • ADP Non-Farm Employment Change
  • Unemployment Claims
  • Construction PMI
  • Core CPI Flash Estimate y/y
  • CPI Flash Estimate y/y
  • Average Hourly Earnings m/m
  • Non-Farm Employment Change
  • ISM Services PMI
  • FOMC Member Barkin Speaks

Potential Gold Market Moves

If gold stays above 2053.50, it could ascend to 2090, supported by long-term upward trends in moving averages. Bearishly, breaking below 2053.50 might lead to declines towards 2030 and 2020, with daily and intraday charts suggesting further weakness and possible tests of lower support levels.

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DISCLAIMER: TIO Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.

Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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