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24 Nov 2023

Gold Price Forecast: XAU/USD find demand after mixed S&P PMIs,US Dollar weakness

  • The XAU/USD sees a boost, ascending to the $2000 level.   
  • The US Dollar weakened after mixed S&P PMIs.
  • Higher US yields may limit the upside of the metal.

 
The XAU/USD is finding traction in Friday's session, capitalising on mixed S&P PMIs and a weakening US Dollar. The pair, commonly recognised as the price of gold in US dollars, is exchanging hands, trading towards $2,000 and seeing 0.30% gains. 

In early November, economic activity within the US private sector displayed slight growth, as indicated by the S&P Global Composite PMI, which maintained its position at 50.7. However, the Manufacturing PMI experienced a decline, falling to 49.4 from 50.0 in the same period, placing it in contraction territory. On the other hand, the Services PMI saw a modest improvement, rising to 50.8 from 50.6. Notably, employment in the US service and manufacturing sectors decreased in November for the first time since mid-2020, influenced by sluggish demand and elevated costs. 

As a reaction, markets seem to be weighing the weakening of the manufacturing sector, boosting dovish bets on the Federal Reserve (Fed), which may explain the weakening of the US dollar. However, US Treasury yields are rising and may limit the upside momentum of the yellow metal. The 2-year rate rose to 4.95% while the 5 and 10-year yields to 4.50% and 4.48%. 

Considering that the Fed remains data-dependent, the US will report Gross Domestic Product (GDP) revisions from Q3 next week as well as Personal Consumption Expenditures (PCE) figures from October, which will likely impact the USD’s price dynamics. 

 

XAU/USD levels to watch

Evaluating the daily chart, the Relative Strength Index (RSI) is positioned near overbought conditions, manifesting a dominant buying momentum but a potential reversal. In addition, the Moving Average Convergence Divergence (MACD) shows a positive trend with its rising green bars, indicating augmenting bullish momentum. 

Contributing to the consolidated bullish narrative is the position of the XAU/USD relative to its Simple Moving Averages (SMAs). Positioned above the 20, 100, and 200-day SMAs, it advances the narrative of bullish control in the broader trend. 

Support Levels: $1,970 (20-day SMA),$1,940 (200-day SMA), $1,930 (100-day SMA).
Resistance Levels: $2,015, $2,030, $2,050.


XAU/USD daily chart

 

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