In the dynamic world of forex trading, two prominent assets have been garnering considerable attention in Week 51: gold (XAUUSD) and the British pound sterling (GBPUSD). Let's delve deeper into the technical analysis and factors influencing these assets' movements. Gold prices displayed an upward trajectory during Week 51, primarily attributed to a weaker US dollar, as indicated by the Dollar Index (DXY), and declining Treasury yields. The market's focus remained fixed on upcoming U.S. economic data, seeking insights into the Federal Reserve's monetary policy stance.
Notably, the benchmark U.S. 10-year bond yields lingered around a five-month low of approximately 3.87% during the report's composition, while the dollar showed signs of weakening against its peer currencies.
- U.S. Economic Data Impact: Traders eagerly anticipated key U.S. economic reports for guidance. Among these, the U.S. GDP report was expected to register growth, jobless claims data was projected to experience a slight uptick, and the November core PCE index report was anticipated to remain steady at 0.2%. The outcomes of these data releases held the potential to sway market sentiment and influence gold's price direction.
- Technical Analysis: From a technical standpoint, gold found robust support near the $1,980 price level and exhibited bullish momentum. The 50-day moving average surpassed the 100-day moving average, confirming the bullish trend. However, the Stochastic indicator approached extreme overbought levels, hinting at the possibility of a correction in the sessions ahead. If bulls maintain their dominance, the initial resistance could emerge around the $2,060 price region. This zone encompasses the 38.2% level of the daily Fibonacci retracement and serves as a psychological resistance point.
GBPUSD (British Pound): In contrast, GBPUSD witnessed a decline, driven by multiple factors, including the dollar's late-session rebound, a lower-than-expected British inflation rate, which hit a two-year low of 3.9% in October, and mounting expectations of a Bank of England rate cut.
The dollar's resurgence stemmed from doubts surrounding the Federal Reserve's plans for earlier-than-expected rate cuts and growing optimism regarding the U.S. economy.
- Factors Influencing GBPUSD: The British pound's downward movement can be attributed to the lower-than-expected inflation rate in the UK, which heightened concerns about economic stability. Additionally, the prospect of a rate cut by the Bank of England added further pressure on GBPUSD. Conversely, the dollar's resurgence was fueled by doubts surrounding the Federal Reserve's rate-cutting intentions and optimism surrounding the U.S. economic outlook.
- Technical Outlook: From a technical perspective, GBPUSD was testing the support of the 20-day moving average and hovering just above the 50% level of the weekly Fibonacci retracement. The upcoming data releases, particularly those favoring the greenback, could potentially lead to minor losses in the GBPUSD pair. In such a scenario, the first level of support might be located at approximately $1.25. This level encompasses psychological support, the 38.2% mark of the weekly Fibonacci retracement, the lower Bollinger Bands boundary, and the 50-day moving average region.
Conclusion: In Week 51, XAUUSD (gold) displayed strength, driven by a weakening U.S. dollar and falling Treasury yields. Meanwhile, GBPUSD faced headwinds due to a lower UK inflation rate and expectations of a Bank of England rate cut, leading to a dollar rebound. Traders should closely monitor economic data releases and technical indicators to make informed decisions in these volatile markets.
