The Price of Gold (XAU/USD) Has Descended to a Significant Support Level
FXOpen
The beginning of 2024 has not been the most positive for gold investors, despite a promising December 2023 when XAU/USD prices reached a historical high of $2135.39 per ounce, primarily due to a weak US dollar and expectations that the Federal Reserve (Fed) would begin lowering interest rates.
However, from the first trading day of January, the price of gold (XAU/USD) has fallen from around $2061 to current levels of around $2015 per ounce (a decrease of 2.3%). This is somewhat surprising considering that gold has a reputation as a defensive asset, and geopolitical tensions persist. Perhaps the price is undergoing a correction after reaching a historical high, pulling back from overbought conditions (evident from the RSI indicator).
The XAU/USD gold chart indicates that:
→ the price has descended to the psychological level of $2000 per ounce, which already showed support on January 17th;
→ the price is also near an important trendline (indicated by the thickened blue line), from which support can be expected;
→ the price is forming a consolidation pattern between the thickened red and blue lines.
What's next?
JPMorgan analysts believe that in 2024, the price of gold (XAU/USD) will reach $2300 as the US GDP growth slows down and the Fed reduces interest rates. However, they suggest that this is likely to happen in the second half of the year, and in the first half, a decline is more probable, increasing the likelihood of a bearish breakout from the current consolidation pattern.
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