Gold hindered by $1994.00 barrier

US Dollar index drops across commodities and major currencies

21 November 2023

  • October slowdown in US inflation index

  • Markets await US Federal Reserve statement results

  • Robust support for Gold at $1965.00 level

The impact of economic events on the US Dollar and Gold

Gold began today's trading session with a noticeable ascent, surpassing the $1990 per ounce threshold. This uptrend was fueled by the depreciation of the US dollar against major currencies and commodities. The impetus behind this shift was a more pronounced-than-expected deceleration in the US inflation index in October of the preceding year, fostering the belief in the market that the US Federal Reserve has concluded its tightening cycle.

US Treasury Secretary Janet Yellen asserted that the United States has made considerable strides in managing inflation and curbing price levels. Yellen also noted that a high-interest-rate environment poses additional challenges for the United States in terms of debt reduction. Notably, statements from several Federal Reserve officials over the past weekend adopted a less hawkish tone, emphasizing the improvement in US inflation rates and the return of commodity inflation to pre-COVID-19 levels.

These declarations have heightened market expectations of a discernible reduction in US price levels, thereby alleviating pressure on the US Federal Reserve to persist in tightening monetary policy and raising interest rates.

Today, market attention is directed towards the release of the outcomes from the US Federal Reserve meeting, seeking deeper insights into the bank's monetary policy trajectory and economic expectations for the near future.

In terms of trading, gold initiated the second session of the week with a substantial increase, hovering near the $1991 per ounce mark.

Crucial technical levels influencing gold movements

Gold is presently encountering resistance at the $1994.00 level, having made several unsuccessful attempts to breach it. Consequently, a modest decline has ensued. A successful breach of this level could potentially contribute to further upward momentum, testing the $1908.00 level. Subsequently surpassing this level might extend the upward trend to $2033.00.

Conversely, if gold retraces from its current levels and fails to overcome the $1994.00 barrier, it may experience a downturn, potentially testing the support level at $1965.00. A breach of this level could lead to a further decline towards $1955.00, and subsequently, breaking that level might extend the downward movement to $1935.00.

Gold 21-11-2021