XAU/USD Extends its 3-Month Highs but Remains Overbought

  • XAUUSD
    (${instrument.percentChange}%)

XAU/USD Analysis

The precious metal is running a relief rally of more than 8% in November, in its first profitable month since March, while last week was the best of 2022. This is largely fueled by the demise of the US Dollar, as markets expectations around the Fed's tightening path eased, after last week's soft CPI report.

XAU/USD has moved above the 200Days EMA and extends its three-month highs today, bringing the 1,808-14 region in its crosshairs, although further advance that would challenge the June highs (1.880) looks like a stretch for now.

On the other hand, the Relative Strength Index (RSI) has been hovering around overbought conditions for a few days now. Such conditions have sparked declines in the recent past and could lead to fresh pressure towards 1,729-1,710, but XAU/USD seems well protected under this region. Daily closes below the EMA200 (at around 1685) would shift near-term bias back to the downside.

On a fundamental level, the US Fed has been preparing market for a moderation in the pace of rate hikes, but Chair Powell has ruled out any pause and pointed to a higher terminal rate than previously expected [1]. Furthermore, policy makers will have two more inflation reports before their next decision in mid-December, making any pivot talk premature.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 30 Nov 2022 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20221102.htm

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