Based on last week’s price chart, the “head and shoulders” pattern in a four-hour timeframe broke the neckline causing the price of gold to plummet from around $1,993 per ounce to $1,933.
However, the market needs to assess the implications of the US dollar’s technical strength and whether it can be sustained, given that the recent monthly US Consumer Price Index (CPI) economic data indicated a depreciation of the greenback, supporting a gold recovery.
According to Forex Factory, the actual data for the monthly Core CPI for October was 0.2 per cent,0.1 per cent lower than for the previous month, while CPI was 0.0 per cent, down from September’s figure of 0.4 per cent.
The yearly CPI was 3.2 per cent, 0.5 per cent less than for September. These changes were massive, and the price of gold rose accordingly, surging from a low of $1,938.84 to $1,970.92 on November 14, the day the figures were released.
But the November 15 meeting between the presidents of the US and China – with the leaders of the world’s two largest economies set to discuss relations and increased communication, as well as global issues such as conflicts and the economy – could dent demand for the safe-haven asset.
“US President Joe Biden and Chinese President Xi Jinping will meet on Wednesday before a summit of the Asia Pacific Economic Cooperation (APEC) forum in San Francisco, seeking to reduce friction in what many see as the world’s most dangerous rivalry.
“The White House says the aim of the summit, to be held at an unannounced location in the San Francisco Bay Area, is to boost communication to prevent an intense rivalry from veering into conflict.
“The meeting [was] expected to cover global issues from the conflict in the Middle East to Russia’s invasion of Ukraine, North Korea’s ties with Russia, Taiwan, human rights, artificial intelligence, as well as ‘fair’ trade and economic relations,” Reuters reported on November 15.
Should such discussions conclude with positive results, gold could likely see a gradual downward trend, with a solid resistance of $2,000 and a strong support of $1,900.