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Asset Watch
Tuesday, November 28, 2023
The US dollar retreated further as market expectations grew regarding the Federal Reserve’s inclination to cut interest rates in the first half of the coming year. This is attributed to the decrease in inflation levels, moving closer to its 2% target, and the growing need of improving the US economy as the tight monetary policy’s effect has become evident, particularly in the real estate sector, where mortgage interest rates surged to 8%.
Financial markets are eagerly awaiting the release of additional economic data this week, including the Consumer Confidence Index and the Purchasing Managers’ Index. Additionally, there is a keen interest in the speeches of certain Federal Reserve members, who may adopt a more dovish tone. However, it is unlikely that they will make explicit statements about the timing of interest rate cuts in the upcoming year. This caution is driven by the concern that such announcements could amplify selling pressure on the US dollar and impede the desired decrease in inflation levels.
Chart source ADSS Platform
On November 27, the gold price printed its highest level since last May at $2,018/oz. If the price breaks above the resistance level at 2021, the price may rally even further towards the high end of the current trading zone located between 2009 to 2030. A daily close above the high end of the zone could embolden some traders to push toward the 2050 threshold.
Conversely, any failure in closing above the high end of the zone suggests insufficient momentum to sustain the upward trend. This circumstance may prompt some traders to exit their long positions, leading to a decline toward the lower limit. A daily close below the low end of the zone could encourage bears to take the initiative and press towards the support area ranging between 1981 and 1974. However, the support level located at 1990 should be watched closely.
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