Market update: gold’s latest price amid the weak dollar

The first of November FOMC minutes meeting will shed some light on the Fed’s thinking for the months ahead. However, markets have already decided interest rates have peaked, and will be cut next year. Nevertheless, Fed chair Jerome Powell remains reticent to say the central bank has won its fight against inflation.

Powell continues to say the US central bank will hike rates further if needed, while the market is saying that US interest rates will be cut by 100 basis points by the end of next year, with the first 25bp chop penciled in at the May 2024 meeting.

With the market now backing the view that rates are not going any higher, the US dollar has been moving lower. The US dollar index has shed four points since the beginning of November and broken through several layers of support with ease. If the DXY is unable to reclaim the 200-day simple moving average, further losses are likely.

US dollar index daily chart

Gold’s technical analysis

In contrast to the US dollar, the technical outlook for gold looks positive. After selling off over the last three weeks, as markets turned risk-on, the precious metal is now seizing the US interest rate space and is pushing higher. Gold is trading above all three moving averages and is back above the 23.6% Fibonacci retracement level at $1,972. The recent $2,009/oz. high is the next target for bulls. Support is seen at $1,972/oz. ahead of $1,960/oz.

Financial markets are expected to quieten down after Wednesday, as the US celebrates Thanksgiving Day on Thursday, before the annual Black Friday event. This liquidity drain will weigh on volatility going into the weekend.

Gold daily price chart

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