Gold Price Forecast: November Low On Radar As RSI Snaps Upward Trend

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The price of gold trades below the 50-Day SMA ($1859) once again as the V-shape recovery from the November low ($1765) unravels, and the Relative Strength Index (RS) indicates a further decline in the precious metal as the oscillator fails to retain the upward trend carried over from the previous month.


The price of gold snaps the range bound price action from the previous week to trade to a fresh monthly low ($1803), and bullion may continue to move to the beat of its own drum as the low interest rate environment along with the ballooning central bank balance sheets no longer provides a backstop for the precious metal.

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It remains to be seen if the US Senate confirmation hearing for Treasury Secretary Janet Yellen will sway gold prices ahead of the inauguration of President-elect Joe Biden as the new administration unveils a $1.9 trillion stimulus package called the American Rescue Plan, but current market conditions may keep bullion under pressure ahead of the next Federal Reserve interest rate decision on January 27 as the central bank remains on track to increase its “holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.”

Recent remarks from Boston Fed President Eric Rosengren suggest the Federal Open Market Committee (FOMC) will rely on its current tools to support the US economy as the official insists that “it is appropriate for us to continue to be buying both MBS and Treasury securities” during an interview with CNBC, with Rosengren going onto say that “it’s a little bit challenging at this stage to recreate” the Main Street Lending program as the economy recovers from the COVID-19 pandemic.

In turn, the US Dollar may continue to reflect an inverse relationship with investor confidence even though the Fed’s balance sheet narrows for the third consecutive week, but the price for gold may continue to move to the beat of its own drum as it no longer reflects the bullish behavior seen in the first-half of 2020.

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