Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an Account
✖

Gold Outlook: Dollar Rally, FOMC, and the Trump Effect

Article By: ,  Market Analyst
November 7, 2024 4:23 AM

Key Events

  • Dollar Rally May Be Losing Momentum: Despite a bullish dollar rally post-election, it may be approaching a key resistance level as the FOMC decision nears
  • Gold's Nearly 100-Point Plunge: Following the election results, gold's steep drop has intensified market anticipation for tonight's FOMC meeting
  • Middle East Geopolitics: Resolutions are unlikely before 2025, sustaining some haven demand for gold
  • Trump's Impact on Trade and Geopolitical Stability: Concerns about trade wars and heightened global tensions weigh heavily on economic outlooks worldwide

Trump Victory and Geopolitics

A Bloomberg opinion recently stated, "America deserves Donald Trump, the world doesn’t," reflecting global concerns over the economic and geopolitical impacts of Trump's policies as he heads toward the White House by 2025. Domestically, his inflation-driven growth agenda may push rates higher, while fears of trade conflicts and inflation risks add to global uncertainty.

Initially, these concerns boosted gold’s appeal, but as political uncertainty settled with Trump’s win, gold slipped below 2700. Meanwhile, unresolved Middle Eastern tensions, unlikely to ease before 2025, may continue to support upside risks for both gold and oil.

FOMC Meeting

The FOMC decision is a critical factor amid volatile fundamentals for the U.S. dollar and broader markets. While the Bank of England is expected to cut rates by 25 bps, the Fed may face greater challenges balancing a volatile labor market, persistent services inflation, and Trump’s agenda of tax cuts, tariffs, and spending hikes.

The latest ISM Services PMI, revisiting 2022 highs, adds further complexity to the Fed’s rate path amid inflationary pressures.

Technical Analysis: Quantifying Uncertainties

Gold Outlook: 3-Day Time Frame

Source: Tradingview

Gold remains within a primary uptrend that began at the October 2023 low, with the recent uptrend from the June 2024 low of 2293 respecting a parallel channel. This channel aligns with the pre-election high of 2790 and the subsequent post-election drop to 2643, forming a critical support zone at the bottom end of the 2600 range.

This area intersects with the one-year uptrend’s consecutive higher lows, suggesting potential for either a breakout or a deeper correction. The scenarios are the following:

Bullish Scenario: A close above 2790 could propel gold’s uptrend towards 2890 and 3050, marking a continuation of the broader uptrend.

Bearish Scenario: a close below 2600 could extend gold’s drop towards 2530 and 2480, signaling a deeper correction phase.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2024