Gold price forecast: metal poised for potential upside amid low volume
Gold price consolidation in symmetrical triangle hints at impending breakout
Gold price has been consolidating in a symmetrical triangle for over two weeks since November 26, indicating a period of indecision as the market waits for a clear directional catalyst.
Recent price action has brought gold to $2,641, given that the previous week finished at a low of $2,613. This marks a relatively tight range as the metal trades below key resistance levels.
Gold price dynamics (November-December 2024). Source: TradingView.
The 100 and 200-day exponential moving averages (EMA) have served as a ceiling for gold bulls, limiting upward movement as the market tests these key technical barriers. On the flip side, the Relative Strength Index (RSI) recently rose from 30 to above 50, suggesting a shift in momentum and positioning. This implies that, while gold remains in consolidation, there is increasing bullish potential as the RSI moves toward neutral territory, which could open the door for higher prices if the trend continues.
Gold price bullish outlook strengthens as Fed rate cut draws near
Furthermore, volume and open interest in gold futures have tapered off since the beginning of November but are yet to fall to levels that would suggest a complete shift to a bearish outlook. Instead, the current volume and open interest levels reflect a period of sideways consolidation, typical before a breakout or a resumption of the previous trend.
The upcoming weeks could prove pivotal, especially with the growing expectation of a 25 basis point rate cut by the US Federal Reserve. The probability of such a cut has risen from 66% in late November to around 85% today, providing a potential tailwind for gold prices. Rate cuts typically support gold as they lower the opportunity cost of holding the metal. Given these factors, gold's price action and technical indicators suggest a key decision point is approaching, with potential upside if the price breaks through resistance levels and macro conditions remain favorable.
Gold dipped to a low of $2,610 per ounce as rising US Treasury bond yields and mixed US jobs data weighed on investor sentiment. The sell-off came as Gold US jobless claims data pointed to a slight improvement in the labour market
