- Spot Gold (XAU/USD) minor corrective pull-back of -3.8% from the 27 October 2023 high to 13 November 2023 low may have ended.
- Potential start of another multi-week bullish up move for Spot Gold (XAU/USD).
- A further slide in the 10-year US Treasury real yield supports a bullish narrative for Gold.
- Watch the key short-term support at US$1,972.
This is a follow-up analysis of our prior report, “Gold Technical: At the risk of further corrective decline before potential recovery” published on 9 November 2023. Click here for a recap.
Spot Gold (XAU/USD) has indeed shaped the corrective decline from its key short-term resistance of US$1,972 mentioned in our report and hit the US$1,932/1,920 support zone (printed an intraday low of US$1,931) on last Monday, 13 November.
Thereafter, the price actions of Gold (XAU/USD) have shaped a strong bullish reversal movement which in turn increases the odds that the corrective decline of -3.8% from the 27 October 2023 high of US$2,009 to 13 November 2023 low may have ended.
Several key technical elements and Intermarket analysis now suggest the Gold (XAU/USD) is likely undergoing another potential multi-week impulsive upmove sequence to retest its current all-time high of US$2,075 in the first step.
Lower opportunity cost of holding Gold
Fig 1: US 10-year Treasury real yield medium-term trend as of 21 Nov 2023 (Source: TradingView, click to enlarge chart)
The 10-year US Treasury real yield has shed -50 basis points (bps) from its 23 October 2023 high of 2.61% to yesterday, 20 November low of 2.11%; its steepest decline since the period of 9 March 2023 to 6 April 2023.
Technically speaking, medium-term momentum has turned bearish for the 10-year US Treasury real yield which increases the odds of a further slide at this juncture toward the long-term pivotal support zone of 1.82%/1.73% (also the lower boundary of the ascending channel from 6 April 2023 low & the 200-day moving average).
Hence, a further slide in the longer-term US Treasury real yield implies a lower opportunity cost of holding Gold as it is a non-interest bearing which in turn may increase its “relative attractiveness” and drive-up demand.
Bullish reversal after a retest on key 200-day moving average
Fig 2: Spot Gold (XAU/USD) medium-term trend as of 21 Nov 2023 (Source: TradingView, click to enlarge chart)
The price actions of Gold (XAU/USD) have shaped a strong weekly bullish candlestick last week that closed more than 50% of the long bearish Marubozu weekly candlestick for the week of 6 November 2023.
In addition, the daily RSI momentum has staged a rebound from its 50 level, indicating a revival of medium-term bullish momentum.
These observations suggest a significant change of sentiment from bearish to bullish that in turn advocates a potential terminal end to its short-term minor corrective decline from 27 October 2023 to 13 November 2023.
Watch the key short-term support at US$1,972
Fig 3: Spot Gold (XAU/USD) minor short-term trend as of 21 Nov 2023 (Source: TradingView, click to enlarge chart)
Yesterday’s price actions of Gold (XAU/USD) have shaped a minor pull-back of -1.4% from last Friday, 17 November high of US$1,993 before it staged a bullish reversal right at its 20-day moving average.
If the US$1,972 key short-term pivotal support holds, the minor short-term uptrend from the 13 November 2023 low remains intact. The next immediate resistances to watch will be at US$2,006 and US$2,028/US$2,037 (minor swing high area of 11 May 2023 & Fibonacci extension from 13 November 2023 low).
However, a break below US$1,972 negates the bullish tone for a pull-back towards the US$1,957 intermediate support.
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