GOLD Price Analysis – Oct 23, 2024
Daily Price Outlook
Gold (XAU/USD) is on a remarkable upward trend, breaking into the $2,750 level on Wednesday and setting new all-time highs. This surge is largely fueled by a heightened demand for safe havens as tensions continue to escalate in the Middle East and uncertainty looms over the upcoming elections in the US.
With former President Donald Trump and Vice President Kamala Harris locked in a tight race in the polls, the prospect of a Trump win raises concerns about stability on the geopolitical front.
Rising Geopolitical Tensions in the Middle East Fuel Gold Price Surge
On the geopolitical front, the increasing tension in the Middle East is pushing gold prices higher as investors seek safe-haven assets. Despite efforts for a ceasefire, fighting continues between the Israeli army, Hamas, and Hezbollah in Gaza and Lebanon.
The death of Hamas leader Yahya Sinwar has not opened any new avenues for negotiations, which many had hoped for. U.S. Secretary of State Antony Blinken, on his eleventh visit to the region, appears no closer to securing a ceasefire, even as reports suggest progress. Recently, he had to take cover in a bunker during air-raid sirens in Tel Aviv.
However, the situation is escalating, with the Israeli military launching attacks on the ancient city of Tyre in Lebanon after warning residents to evacuate. Furthermore, conflict is expected to intensify as Israel prepares for a potential retaliatory strike against Iran.
This urgency follows an incident where an Iranian drone breached Israeli air defenses and exploded near Prime Minister Benjamin Netanyahu’s residence.
Impact of Strengthening US Dollar and Rate Cut Expectations on Gold Prices
On the US front, the broad-based US dollar is gaining strength as recent signs of economic resilience and inflation concerns reduce the likelihood of significant interest rate cuts by the Federal Reserve in November.
The CME FedWatch Tool shows a 91% chance of a modest 25-basis-point rate cut, but expectations for a larger 50-basis-point cut are absent. Currently, the yields on 2-year and 10-year US Treasury bonds are 4.04% and 4.21%, respectively.
Federal Reserve Bank of Minneapolis President Neel Kashkari noted that the Fed is carefully watching the labor market for any signs of instability. He advised investors to prepare for a gradual pace of rate cuts in the upcoming quarters, indicating that any easing will be moderate rather than aggressive.
Meanwhile, San Francisco Fed President Mary Daly expressed support for further easing, believing there is no reason to stop lowering rates.
In contrast, Kansas City Fed President Jeffrey Schmid took a more cautious stance, suggesting restraint in large rate cuts and emphasizing that the labor market is stabilizing rather than deteriorating.
Consequently, the strengthening US dollar and reduced expectations for significant interest rate cuts may pressure gold prices, as higher interest rates typically increase the opportunity cost of holding non-yielding assets like gold. This could lead to decreased investor demand for gold.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) continued their modest upward trend on Wednesday, edging 0.04% higher to $2750.14 during the early European session. The precious metal remains buoyant, underpinned by global macroeconomic concerns and a weakening U.S. dollar, providing solid ground for bullish sentiment.
On the 4-hour chart, key technical levels reveal that Gold is positioned just above its pivot point of $2739.97, which could act as a critical marker for further upside momentum. Immediate resistance stands at $2752.73, followed by stronger hurdles at $2764.86 and $2776.39. If prices close above the immediate resistance level, Gold may gather enough momentum to test the higher resistance at $2764.86.
On the downside, initial support lies at $2729.46, with subsequent supports at $2716.59 and $2701.94. A breach of $2729.46 could trigger a deeper corrective pullback toward these lower levels.
From a technical standpoint, the Relative Strength Index (RSI) is currently at 66.00, indicating that Gold is nearing overbought territory but still has room for upward movement before significant correction risk emerges.
The 50-day Exponential Moving Average (EMA) of $2718.48 provides additional bullish confirmation, as prices remain comfortably above this key moving average, suggesting ongoing bullish strength in the short term.
For traders looking for entry points, the outlook remains positive with a buy entry above $2740, targeting the next resistance at $2764. However, caution is warranted with a stop loss at $2729 to manage downside risks.
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- EUR/USD Price Analysis – Oct 23, 2024
EUR/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair failed to stop its downward trend and remains under pressure due to a faster-than-expected decline in inflation and increasing concerns over a potential downturn in the Eurozone economy, leading to speculation about further interest rate cuts by the European Central Bank (ECB).
Concurrently, the US dollar has strengthened, driven by various factors, including political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve’s (Fed) policy-easing cycle will proceed more gradually than anticipated. Investors will be particularly focused on the Fed’s Beige Book, set to be released on Wednesday at 18:00 GMT, along with speeches from several Fed and ECB members, including President Lagarde.
EUR Under Pressure as Inflation Declines and ECB Rate Cut Speculation Grows
On the EUR front, the outlook for the Euro (EUR) has worsened due to a faster-than-expected decline in inflation and rising concerns about a potential downturn in the Eurozone economy. This situation has sparked speculation about more interest rate cuts by the European Central Bank (ECB), which has already lowered its Deposit Facility Rate three times this year. Many traders expect another cut in December, prompting discussions about what level of borrowing rates would effectively control inflation while also encouraging economic growth.
Recently, some ECB officials have debated whether to lower interest rates below the so-called neutral rate, which is estimated to be around 2% to 2.25%. Lithuanian central bank governor Gediminas Šimkus highlighted concerns about inflation potentially staying too low, suggesting that if disinflation continues, rates may drop below natural levels.
Meanwhile, ECB President Christine Lagarde expressed confidence that inflation would return to the bank’s target of 2% by 2025, earlier than expected. She noted that while the direction of monetary policy is clear, the pace of future interest rate cuts will depend on incoming economic data.
Therefore, the worsening outlook for the Euro and expectations of further ECB rate cuts are likely to keep the EUR/USD pair under pressure. A weaker Euro combined with a stronger US dollar could lead to continued declines in the EUR/USD exchange rate.
US Dollar Strength Pressures EUR/USD Amid Political Uncertainty and Fed Expectations
On the US front, the broad-based US dollar (USD) is gaining strength, pushing the EUR/USD pair down to near 1.0780 level. However, this strength in the dollar is fueled by political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve (Fed) will adopt a more gradual approach to any policy easing than previously thought.
Market sentiment has shifted due to increasing bets that former President Donald Trump could win the election, scheduled in less than two weeks. While recent polls show Vice President Kamala Harris with a slight lead, a Trump victory could lead to higher tariffs and lower taxes, potentially pushing the Fed to adopt a more restrictive policy stance.
Currently, markets anticipate two 25 basis point interest rate cuts from the Fed in November and December. However, analysts suggest that the Fed is unlikely to implement another large rate cut like the one in September, especially since recent Nonfarm Payrolls (NFP) data indicates that labor demand remains strong. Investors are closely watching the Fed’s Beige Book release at 18:00 GMT, along with speeches from Fed and ECB officials, including President Lagarde.
Therefore, the strengthening US dollar, driven by political uncertainty and expectations of gradual Fed policy easing, is likely to continue putting downward pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
From a technical perspective, EUR/USD is trading just below its pivot point of $1.08117, signaling indecision in the market and the potential for a breakout in either direction.
Immediate resistance is found at $1.08309, followed by $1.08475, and a stronger level at $1.08698. A breach of these resistance levels may trigger a broader upward move, but current momentum remains subdued.
On the downside, immediate support sits at $1.07920, with additional levels at $1.07712 and $1.07486. A break below $1.07920 would likely signal renewed selling pressure, pushing the pair toward these lower support levels.
The Relative Strength Index (RSI) is at 36, indicating mild bearish momentum, as EUR/USD remains in a consolidative phase. The 50-day Exponential Moving Average (EMA), currently at $1.08344, suggests that prices are trading below a critical threshold, reinforcing the short-term bearish outlook.
For traders, a short position could be considered if EUR/USD drops below $1.08179, with a target at $1.07716 and a stop-loss at $1.08478 to manage upside risks.
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GBP/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward momentum, holding strong around the 1.2995 level. This is quite impressive, especially given the typically bullish US dollar, which tends to push prices down.
However, the Pound Sterling (GBP) found support following comments from Bank of England Monetary Policy Committee member Megan Greene. She shared a slightly hawkish perspective on interest rates during her discussion with the Atlantic Council at the IMF meeting on Tuesday. This was seen as a key factor that kept the GBP/USD pair higher.
Looking ahead, traders are keeping a close eye on the upcoming flash S&P Global/CIPS Purchasing Managers Index (PMI) data for October, set to be released on Thursday. Meanwhile, the expectations are for the PMI report to show modest growth in overall business activity, which could further influence market sentiment.
Pound Sterling Strengthens on Hawkish BoE Outlook Amid Upcoming Key Speech
As we mentioned, the British currency has gained traction right after hawkish comments from Bank of England (BoE) Monetary Policy Committee member Megan Greene. During a discussion with the Atlantic Council at the International Monetary Fund (IMF) meeting, Greene provided a slightly hawkish outlook on interest rates.
She emphasized the need for monetary policy to continue addressing inflation to meet target levels. When asked if the recent decline in UK inflation would affect her vote in November, Greene noted that the drop was influenced by volatile factors and suggested she wouldn’t rely too heavily on this data.
It's important to remember that Greene was one of the four MPC members who voted to keep interest rates unchanged in August when the BoE reduced rates by 25 basis points to 5%. Moving ahead, the next key event for the Pound Sterling will be BoE Governor Andrew Bailey’s speech scheduled for 18:45 GMT.
Investors will be keen to hear his insights for clues on potential monetary policy changes in November and December. Meanwhile, traders are already anticipating another interest rate cut in November, which could further influence the Pound's performance.
Therefore, the Pound's strengthening due to Megan Greene's hawkish comments may bolster the GBP/USD pair. If BoE Governor Bailey's upcoming speech suggests a more cautious stance on rate cuts, it could support the Pound further, enhancing its value against the US dollar.
US Dollar Strengthens Amid Election Uncertainty, Pressuring GBP/USD
On the US front, the broad-based US dollar has been gaining strength, putting pressure on the Pound Sterling, which is struggling to stay above the psychological resistance level of 1.3000 against the US dollar during Wednesday's London session. This increase in the dollar's appeal as a safe haven comes amid uncertainty surrounding the upcoming US presidential elections on November 5.
However, recent polls show Vice President Kamala Harris with a slight lead over former President Donald Trump, raising concerns among investors. Market participants are worried that if Trump wins, it could lead to higher tariffs, negatively affecting exports from key trading partners such as the Eurozone, Canada, Mexico, China, and Japan.
Moreover, expectations for a gradual easing of Federal Reserve policies this year and into 2025 have further boosted the dollar's appeal. The International Monetary Fund (IMF) has also raised its growth forecast for the US in 2023 to 2.8% from 2.6% previously, along with increasing GDP projections for 2025 to 2.2%.
Therefore, the strengthening US dollar, driven by election uncertainties and higher growth forecasts, places downward pressure on the GBP/USD pair.
GBP/USD – Technical Analysis
Technically, GBP/USD is trading just below its pivot point of $1.30087, indicating a potential for range-bound price action in the short term. Immediate resistance is noted at $1.30716, with higher resistance levels at $1.31246 and $1.31760. A move above $1.30716 could push the pair toward these higher resistance levels, but momentum appears to be fading.
On the downside, immediate support is found at $1.29495, with subsequent support at $1.28987 and a deeper level at $1.28242. A breach below $1.29495 would likely signal increased selling pressure, potentially leading to a more significant correction toward the lower support zones.
The Relative Strength Index (RSI) is at 44, suggesting a lack of strong directional bias as the pair remains in neutral territory. Meanwhile, the 50-day Exponential Moving Average (EMA) at $1.30268 indicates that GBP/USD is struggling to break back above critical resistance, which reinforces a slightly bearish outlook for the near term.
For traders, a short position may be considered if GBP/USD drops below $1.30252, with a take-profit target at $1.28981 and a stop-loss at $1.30761 to manage potential upside risks.
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AUD/USD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, gaining positive traction around the 0.6687 level and reaching an intra-day high of 0.6694.
This upward movement can be attributed to the hawkish outlook from the Reserve Bank of Australia (RBA), driven by strong employment data from Australia. Additionally, China's recent rate cuts provided further support for the AUD, as China is Australia’s largest trading partner.
However, the pair gains could be limited amid sharp rise in US Treasury yields, which surged over 2% on Monday due to signs of robust economic activity and concerns about a potential resurgence of inflation in the United States.
Traders are now anticipating the upcoming Purchasing Managers Index (PMI) reports from both the US and Australia, set for release on Thursday. These reports could offer further insights into the economic outlooks and influence future monetary policy decisions.
Positive RBA Outlook and Strong Employment Data Support AUD/USD, But Future Rate Cut Expectations May Limit Gains
On the AUD front, the Australian Dollar received support from a positive outlook on the Reserve Bank of Australia’s (RBA) policy, fueled by strong employment data. China's recent interest rate cuts also benefited the AUD, as China is Australia’s largest trading partner.
RBA Deputy Governor Andrew Hauser, speaking at the CBA 2024 Global Markets Conference, highlighted the surprisingly strong employment growth and noted that while the RBA closely watches data, it remains flexible and not overly focused on short-term changes.
On the data front, Australia’s job market showed impressive gains in September, with employment rising by 64.1K, much higher than the expected 25K increase. This pushed total employment to a record 14.52 million.
Meanwhile, the unemployment rate held steady at 4.1%, below the forecasted 4.2%. In response to these developments, the National Australia Bank revised its outlook for RBA rate cuts, now predicting the first reduction in February 2025, instead of May, with rates expected to drop gradually to 3.10% by early 2026.
Therefore, the strong employment data and positive RBA outlook boosted the AUD/USD pair, but future rate cut expectations could limit gains as market focus shifts to long-term monetary easing by the RBA.
US Dollar Strengthens on Strong Economic Data and Reduced Fed Rate Cut Expectations, Pressuring AUD/USD Pair
On the US front, the US Dollar gained strength as recent economic data reduced the chances of a large interest rate cut by the Federal Reserve (Fed) in November. The CME FedWatch Tool now indicates an 89.1% likelihood of a 25-basis-point rate cut, with no expectation of a bigger 50-basis-point cut.
US Treasury bond yields also reflect this sentiment, with 2-year yields at 4.02% and 10-year yields at 4.19%. Federal Reserve officials, including Minneapolis President Neel Kashkari, have noted that while the Fed will eventually ease rates, the process will likely be gradual, not aggressive.
On the data front, US economic indicators showed strength. Retail sales increased by 0.4% month-over-month in September, better than both the previous month's 0.1% rise and market expectations of a 0.3% gain.
Additionally, Initial Jobless Claims fell by 19,000 in the week ending October 11, the largest drop in three months, with total claims at 241,000, much lower than the expected 260,000. These figures suggest a healthy labor market, further supporting the Fed’s cautious approach to cutting interest rates gradually.
Therefore, the strong US economic data and reduced chances of aggressive Fed rate cuts boosted the US Dollar, putting downward pressure on the AUD/USD pair as the USD gained strength against the Aussie Dollar.
AUD/USD – Technical Analysis
The Australian dollar is showing a modest uptick against the U.S. dollar, with the AUD/USD pair currently trading at $0.66875, up 0.44% on the day. On the 4-hour chart, the pair remains near key pivot levels, indicating potential for both upside and downside movement depending on upcoming economic data and market sentiment.
The immediate pivot point stands at $0.66985, with the pair's direction largely dictated by price action around this level.
Immediate resistance lies at $0.67233, and if breached, could lead to further upside with targets at $0.67454 and $0.67688. On the flip side, should bearish momentum take over, the price could slip toward immediate support at $0.66687, followed by $0.66512 and $0.66302.
The 50-day Exponential Moving Average (EMA), which is currently positioned at $0.66883, serves as a dynamic support level and will play a critical role in determining near-term direction.
The Relative Strength Index (RSI) is currently at 52, indicating neutral momentum, suggesting that neither buyers nor sellers have a strong grip on the market at present. With the RSI hovering around the mid-point, traders should watch for potential shifts in sentiment based on global risk factors and U.S. dollar dynamics.
In conclusion, the current price action suggests a possible short-term bearish bias if the price slips below $0.66982. A sell entry below this level with a target of $0.66681 and a stop-loss at $0.67158 may provide favorable risk-reward opportunities. However, upside potential remains viable if resistance levels are tested.
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USD/CAD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair struggled to maintain its bullish momentum, dropping to around the 1.3830 level despite a strong US dollar and a dovish stance from the Bank of Canada (BoC) regarding interest rate cuts.
However, the recent losses in the USD/CAD pair may be short-lived, as the BoC is anticipated to cut interest rates by 50 basis points to 3.75%.
Moreover, a bullish US dollar could help limit further declines in the pair. The outlook for the US dollar remains positive, with investors expecting a gradual rate-cut cycle from the Federal Reserve for the remainder of the year.
Anticipated Rate Cuts and Economic Challenges for the Canadian Dollar
On the CAD front, the USD/CAD pair experiencing fluctuations as investors await the Bank of Canada’s (BoC) interest rate decision, set to be announced on Wednesday. However, the BoC is expected to cut its key borrowing rate by 50 basis points (bps) to 3.75%.
This would mark the fourth consecutive interest rate reduction by the central bank. The larger cut is a response to a rising unemployment rate and slowing inflation, indicating the need for stronger economic support.
On the data front, the latest figures highlight ongoing challenges in the Canadian economy. The slight decrease in the unemployment rate to 6.5% suggests some improvement, but it is still above the 5% level typically associated with full employment. This indicates that many Canadians are still struggling to find jobs.
These factors have prompted discussions around the need for more stimulus to encourage spending and job creation. As a result, the anticipated rate cuts from the BoC are seen as crucial to supporting economic recovery and addressing these persistent issues.
US Dollar Strength and Its Impact on the USD/CAD Pair
On the US front, a strong US dollar has been helping the USD/CAD pair. Investors are optimistic about the USD’s outlook, as many expect the Federal Reserve (Fed) to start a gradual rate-cut cycle later this year.
According to the CME FedWatch tool, the Fed is likely to reduce interest rates by 25 basis points (bps) in both November and December. This potential rate cut is contributing to the USD's strength and helping the USD/CAD pair to limit its losses.
In addition, the upcoming presidential election, just two weeks away, is adding uncertainty to the Canadian dollar. However, the competition between former President Donald Trump and current Vice President Kamala Harris is intense, and a Trump victory could lead to higher import tariffs. This would negatively impact the currencies of the US's trading partners, including Canada.
On the economic front, investors are also keenly awaiting the flash S&P Global PMI data for October, scheduled for release on Thursday. This data will provide insights into the economic health of both the US and Canada, further influencing the currency markets.
USD/CAD – Technical Analysis
The USD/CAD pair is trading near $1.38294, slightly down by 0.02% on the 4-hour chart. Currently, the pair remains below the pivot point at $1.38441, showing a neutral-to-bearish bias in the short term. Despite the minor decline, the pair is holding above key support levels, which could provide a bounce, though resistance areas will need to be tested for further upside momentum.
Immediate resistance is positioned at $1.38623, followed by $1.38821 and $1.39030. A successful break above these resistance levels could signal renewed bullish momentum. However, failure to breach these areas may result in further consolidation or a deeper pullback.
On the downside, immediate support is at $1.38120, with subsequent support levels at $1.37911 and $1.37691. The 50-day Exponential Moving Average (EMA), located at $1.37976, is acting as a dynamic support level and will be a critical indicator for traders to watch. A move below this EMA could lead to additional downside pressure.
The Relative Strength Index (RSI) is currently at 58, indicating that there is still room for upward movement, though momentum remains moderate.
In conclusion, the technical picture for USD/CAD remains mixed, with critical support and resistance levels providing the next directional cues.
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- GOLD Price Analysis – Oct 22, 2024
GOLD Price Analysis – Oct 22, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained its upward trend and remained well bid around the $2,730 mark. However, the bullish trend was mainly backed by the ongoing uncertainties surrounding the upcoming US Presidential election and escalating conflicts in the Middle East.
Apart form this, the anticipated interest rate cuts by major central banks have also played a major role in supporting the demand for this safe-haven asset.
Conversely, the US dollar remains strong, trading near its highest level since early August. This bullish sentiment is largely attributed to a recent increase in US Treasury bond yields, driven by expectations of a smaller interest rate cut by the Federal Reserve (Fed) in November. As a result, the robust US dollar may limit potential gains in gold prices.
Gold Remains a Safe Haven Amid Global Concerns, While US Dollar Rises with Increased Treasury Yields
On the US front, the broad-based US dollar has shown bullish momentum following a recent spike in US Treasury bond yields. This strength was driven by market expectations of a smaller interest rate cut from the Federal Reserve (Fed) in November, pushing bond yields to nearly three-month highs.
Meanwhile, investors have dismissed the likelihood of a larger rate cut, further bolstering the dollar, which is currently at its highest level since early August.
Despite the robust performance of the US dollar, bullish sentiment surrounding Gold prices (XAU/USD) remains resilient. Traders are favoring Gold as a safe haven amid global uncertainties, including the impending US Presidential election and rising tensions in the Middle East.
Market participants are keeping a close eye on the upcoming release of the Richmond Manufacturing Index and a speech by Philadelphia Fed President Patrick Harker, as these events could provide crucial insights into the future direction of Gold prices.
Gold Gains Appeal as Safe Haven Amid Geopolitical Tensions and Global Rate Cut Expectations
As we mentioned, Gold prices have gained traction amid rising uncertainty surrounding the upcoming US Presidential election on November 5 and the potential for a broader conflict in the Middle East. A recent projectile fired from Lebanon landed in central Israel, escalating tensions as Israel issued warnings of further attacks on Hezbollah following strikes on the group’s financial operations.
These geopolitical risks continue to reinforce Gold's status as a safe-haven asset, drawing investors seeking stability in uncertain times.
Moreover, it received further boost following the European Central Bank's (ECB) decision to lower interest rates for the third time this year, marking its first consecutive rate cut in 13 years. On the UK front, disappointing inflation data has reinforced expectations for aggressive rate cuts by the Bank of England.
These anticipated interest rate cuts enhance gold's appeal as an investment, contributing to its recent price increase. (edited)
GOLD (XAU/USD) – Technical Analysis
Gold is trading at $2,733.64, up 0.51%, as it continues its upward momentum within a bullish channel on the 4-hour chart. The price is hovering just above the $2,728.47 pivot point, and the technical outlook suggests that further gains are likely if the metal can break through immediate resistance levels.
The RSI is currently at 65, signaling a bullish sentiment, though nearing overbought territory. This indicates that while the current uptrend is intact, traders should be cautious of potential pullbacks.
The immediate resistance sits at $2,740.60, and if this level is breached, the next resistance zones are expected at $2,752.73 and $2,764.86. These higher resistance points are within reach if momentum continues, supported by solid technical indicators and geopolitical uncertainty fueling safe-haven demand.
On the downside, the immediate support is found at $2,716.59, followed by key levels at $2,701.94 and $2,693.04. These supports will be crucial if the price fails to maintain its current upward trajectory.
The 50-day Exponential Moving Average (EMA), currently at $2,703.54, offers additional dynamic support, reinforcing the $2,703 area as a key psychological level for traders.
In conclusion, gold’s bullish bias remains intact, especially as the price trades above $2,728. For traders looking to enter the market, a buy position above $2,728 with a target of $2,752 is suggested, while a stop-loss can be placed at $2,717 to manage risk. Continued strength above resistance levels could signal further gains toward $2,764.
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GOLD Price Analysis – Oct 21, 2024
Daily Price Outlook
Gold prices (XAU/USD) started this week on a bullish trend and maintain their intraday gains during the early European session, trading around the all-time high of $2,731. However, the easing of monetary policies and ongoing geopolitical tensions in the Middle East have created a bullish environment for the non-yielding yellow metal. Moreover, uncertainty in US politics has contributed to the recent upward momentum over the past couple of weeks.
At the same time, expectations of modest rate cuts from the Federal Reserve have supported US Treasury bond yields, which, in turn, boosted the US Dollar. The USD Index (DXY) is now nearing its highest level since early August. Hence, this strength in the Dollar, along with slightly overbought technical conditions, could limit further gains in Gold in the near term.
US Dollar Strength and Geopolitical Risks Shape Gold Price Trends
On the US front, the broad-based US Dollar has gained bullish traction as expectations of modest rate cuts by the Federal Reserve (Fed) help keep US Treasury yields higher. However, the USD Index (DXY), which tracks the dollar against a basket of major currencies, is inching closer to its highest level since August. Investors have ruled out the possibility of a large interest rate cut by the Fed in November, as the US economy continues to show resilience in recent macroeconomic data.
Fed officials, like Atlanta Fed President Raphael Bostic, have indicated that they're not in a hurry to cut rates, with expectations that rates will eventually fall to around 3-3.5% by the end of next year. In contrast, weak inflation data from the UK has fueled expectations of more aggressive easing from the Bank of England. Despite higher US bond yields, the positive trend in Gold prices remains intact, driven by safe-haven demand amid geopolitical risks and broader market uncertainties.
Therefore, the strengthening US dollar and higher Treasury yields may limit further gains in Gold prices. However, ongoing geopolitical risks and market uncertainties continue to drive safe-haven demand, keeping the precious metal's upward trend intact despite these headwinds from the Dollar.
Geopolitical Tensions and Political Uncertainty Fuel Gold Prices to New Highs
On the other hand, the increasing geopolitical tensions in the Middle East continue to boost Gold prices. Despite the killing of Hamas leader Yahya Sinwar, the conflict shows no signs of easing, as Israel prepares to respond to Iran’s October strike. Israel’s Prime Minister, Benjamin Netanyahu, remains determined to continue the war despite attacks by Hezbollah.
However, the situation has escalated with Israeli airstrikes across Lebanon and intensified attacks in Gaza, raising fears of a larger regional conflict. This has heightened safe-haven demand for Gold, helping it maintain its upward momentum and reach a new all-time high during the Asian session on Monday.
In addition to geopolitical risks, political uncertainty in the US also supports Gold's rise. Recent polls show a tight race between Donald Trump and Vice President Kamala Harris, adding to market uncertainty and boosting demand for Gold. Furthermore, investors welcomed two new funding schemes launched by the People's Bank of China on Friday, aimed at supporting capital market development.
These combined factors have helped Gold reach a fresh all-time high during the Asian session on Monday, continuing its strong upward trend.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,721.90, showing an intraday increase of 0.06%. The market sentiment remains bullish as prices hold above critical support levels.
Gold continues to extend its bullish momentum, with prices maintaining an upward channel formation. On the 2-hour chart, XAU/USD has bounced off its immediate support level at $2,713.94, driven by buying interest around this key pivot zone. The precious metal is steadily climbing towards the next resistance levels, suggesting a possible rally if prices break through the critical barrier of $2,732.08.
Technical indicators also reinforce this positive outlook. The Relative Strength Index (RSI) is currently hovering at 69.44, suggesting a moderately overbought condition but still leaving room for potential gains. The 50-period Exponential Moving Average (EMA) is positioned at $2,678.89, offering solid support to the ongoing trend.
Should gold hold above $2,714.00, the immediate upside target lies at $2,732.00. A breakout above this resistance would open the door for a further advance towards the $2,740 level. However, failure to maintain the $2,713 support could result in a pullback, with next support levels at $2,703.00 and $2,693.00.
Conclusion: The overall outlook for gold remains bullish as long as prices stay above $2,714. Entry points for traders may include buying above $2,714 with a take-profit target of $2,732 and a stop-loss at $2,703. The RSI and 50 EMA suggest positive momentum, making the current price zone an attractive entry for upward positions.
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EUR/USD Price Analysis – Oct 21, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair is struggling to maintain its gains from the previous week and turned bearish on Monday, trading around the 1.0857 level and reaching an intra-day low of 1.0846. However, this downward trend is likely to continue, driven by the expectation that the US dollar will strengthen as modest rate cuts by the Federal Reserve (Fed) support higher US Treasury yields.
Moreover, the declines in the pair will likely accelerate as investors anticipate further interest rate easing by the European Central Bank (ECB). Market participants will closely monitor the upcoming two-day speech by ECB President Christine Lagarde, starting Tuesday.
Bearish Outlook for EUR/USD Amid ECB Rate Cut Expectations
As we mentioned above, the EUR/USD pair could face further selling pressure as investors think the European Central Bank (ECB) will cut interest rates again. The Eurozone’s economic growth is slowing, and inflation is below the ECB’s target of 2%. Many believe the bank will lower borrowing rates in December. Meanwhile, Estonian central bank Governor Madis Müller mentioned that weak economic growth could lead to lower inflation. The ECB’s recent survey also lowered next year's inflation forecast to 1.9%, down from 2%.
Moreover, Gediminas Šimkus, a member of the ECB Governing Council, shared a cautious view on interest rates. He said that if disinflation continues, rates might go below what’s considered normal. Investors will be paying close attention to ECB President Christine Lagarde’s two-day speech starting Tuesday. After the recent 25 basis point rate cut, Lagarde didn’t provide a clear plan for future rates, saying that decisions will depend on new economic data.
Therefore, the expectation of further interest rate cuts by the ECB, combined with slowing economic growth and lower inflation forecasts, is likely to weaken the EUR/USD pair.
US Dollar Strengthens Amid Rate Cut Expectations and Upcoming Elections
On the US front, the US dollar maintained its upward trend and recently reached an 11-week high near 104.00. Traders are feeling positive about the dollar's future, believing the Federal Reserve (Fed) will slowly lower interest rates. Data from the CME FedWatch tool shows that the market expects the Fed to cut rates by a total of 50 basis points this year, with 25 basis points likely in both November and December.
Meanwhile, the expectations for a slower rate-cutting approach from the Fed have grown after strong US economic data for September. Investors will be looking closely at the preliminary S&P Global Purchasing Managers’ Index (PMI) data for October, set to be released on Thursday.
Moreover, the US dollar could see some ups and downs as the presidential elections get closer. Recent polls indicate that Democratic candidate and current Vice President Kamala Harris is ahead of Republican nominee and former President Donald Trump.
EUR/USD – Technical Analysis
EUR/USD is currently trading around $1.0861, reflecting a slight downward trend of 0.04%.
On the 2-hour chart, EUR/USD faces a key resistance level around $1.0869, corresponding to the 50-period Exponential Moving Average (EMA), which continues to act as a barrier for upward momentum. Recent trading sessions indicate a slight recovery attempt in EUR/USD, bouncing off from its immediate support at $1.0835. However, price action remains constrained below a descending trendline, suggesting ongoing selling pressure.
The Relative Strength Index (RSI) at 45.13 reflects neutral conditions, with slight bearish momentum. This signals potential room for further decline if selling pressure persists. Any failure to clear the immediate resistance could lead to renewed downward movement.
If EUR/USD breaks below $1.0868, it would face the next support level at $1.0813, followed by a critical base at $1.0794. On the upside, clearing the immediate resistance would open the door to $1.0894, followed by another key hurdle at $1.0916.
Conclusion:
If EUR/USD fails to surpass the $1.0869 resistance level, traders may consider selling below $1.0868, targeting $1.0813 as the next key support. However, a stop-loss should be placed above $1.0894 to manage risk.
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GBP/USD Price Analysis – Oct 21, 2024
Daily Price Outlook
During the European session on Monday, the GBP/USD pair struggled to maintain its upward trend, turning bearish around the 1.3026 level and hitting an intraday low of 1.3012. However, the surprise drop in the UK Consumer Price Index (CPI) has increased expectations for a 25 basis point (bps) interest rate cut at the upcoming November 7 meeting.
Meanwhile, money markets are pricing in the possibility of another BoE rate cut in December, which could further undermine the British Pound (GBP). This situation, combined with the underlying bullish sentiment surrounding the US Dollar (USD), reinforces the negative outlook for the GBP/USD pair. However, the strength of the US Dollar was supported by expectations of modest rate cuts by the Federal Reserve (Fed).
UK Inflation Decline Fuels Rate Cut Expectations, Weighing on GBP/USD Pair
On the data front, the surprising drop in the UK Consumer Price Index (CPI) has brought inflation to its lowest level since April 2021, falling below the Bank of England's (BoE) 2% target. This development has raised expectations for a 25 basis point (bps) interest rate cut at the BoE's meeting on November 7. Moreover, money markets are considering the possibility of another rate cut in December, which could further weaken the British Pound (GBP).
As a result, any short-term increase in the GBP/USD pair could be seen as a selling opportunity. However, bearish traders may choose to wait for the pair to fall below the important 1.3000 psychological level before making new bets. If the pair does drop below this mark, traders may position themselves for a further decline toward the support level at the 100-day Simple Moving Average (SMA), currently around the 1.2960 region.
US Dollar Strengthens Amid Fed's Stance and UK Inflation Data, Pressuring GBP/USD Pair
On the US front, the US dollar is gaining strength as expectations of modest rate cuts by the Federal Reserve (Fed) support higher US Treasury yields. Investors have dismissed the chance of a significant interest rate cut by the Fed in November, as recent economic data shows that the US economy remains resilient.
Fed officials, including Atlanta Fed President Raphael Bostic, have expressed that there is no rush to cut rates, with forecasts suggesting rates may eventually fall to around 3-3.5% by the end of next year. This stability in US monetary policy contrasts sharply with the weak inflation data from the UK, which has raised expectations for more aggressive easing measures from the Bank of England.
As a result, the stronger US Dollar and shifting monetary policies create a challenging environment for the GBP/USD pair. The combination of a resilient US economy and potential rate cuts from the Bank of England may lead to further declines in the British Pound's value against the dollar.
GBP/USD – Technical Analysis
GBP/USD is currently trading at $1.30431, with minor fluctuations indicating consolidation around this level. The pair faces selling pressure after peaking at $1.30816, failing to break a key resistance zone.
The GBP/USD has retraced from its resistance zone of $1.30821, and the price is currently hovering near the pivot point of $1.30322. The pattern on the chart indicates a bearish bias, especially after the pair failed to break above the resistance level at $1.30821.
Technical indicators present mixed signals. The Relative Strength Index (RSI) is currently at 55.93, indicating that the market is neither overbought nor oversold, which suggests that there’s still room for downside movement. The 50-period Exponential Moving Average (EMA) at $1.30322 acts as a dynamic support level, but the price is trending below it, hinting at potential bearish pressure.
Key levels to watch include the immediate support at $1.30148. A break below this level could accelerate selling towards the next support levels at $1.29953 and $1.29733. Conversely, if prices rebound from $1.30148, immediate resistance stands at $1.30816, with a key upside target of $1.31301.
Conclusion: GBP/USD’s outlook remains bearish below $1.30559. Traders may consider entering short positions below this level, targeting $1.30148 with a stop-loss at $1.30821. The bearish sentiment is reinforced by the pair trading below the pivot point and immediate resistance zone.
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GOLD Price Analysis – Oct 18, 2024
Daily Price Outlook
Gold prices (XAU/USD) soared to a new record high near the 2,710 level on Friday, continuing an impressive bullish bias. This surge reflects growing expectations that major central banks might cut interest rates soon, a move that often boosts demand for gold, which doesn’t pay interest.
At the same time, rising tensions in the Middle East and the uncertainty surrounding the upcoming US Presidential election are making gold more attractive as a safe haven for investors. With all these factors at play, it’s no surprise that many are turning to gold in these turbulent times.
In addition to this, the recent decline of the US Dollar from its highest levels since early August has been a boost for gold prices. On top of that, the positive US macroeconomic data released on Thursday has reinforced the idea that the Federal Reserve might opt for modest interest rate cuts. This situation could help stabilize the dollar's downward trend while also making gold a more appealing option for investors looking for a safe place to park their money.
Fed Rate Cuts and Positive Economic Data Drive Gold Demand Amid Market Uncertainty
On the US front, the Federal Reserve (Fed) is expected to lower interest rates again after a significant cut in September. At the same time, weak inflation data from the UK has increased expectations that the Bank of England may cut rates more aggressively. Meanwhile, the European Central Bank (ECB) recently lowered rates for the third time this year, marking the first back-to-back cuts in 13 years due to worsening economic conditions. These moves by central banks, along with a slight drop in the US Dollar, have supported rising gold prices, as lower interest rates tend to make gold more attractive.
In addition to central bank actions, positive US economic data is also influencing the market. The US Census Bureau reported that retail sales rose by 0.4% in September, beating expectations of 0.3%, and initial jobless claims dropped to 241,000, better than the forecasted 260,000. Furthermore, the Philadelphia Federal Reserve's business conditions index increased significantly in October, reaching 10.3.
As traders focus on upcoming US housing data and a speech by Fed Governor Christopher Waller, the combination of expected interest rate cuts and positive economic news is likely to keep boosting demand for gold, as investors turn to it for stability during uncertain times.
Geopolitical Uncertainty Fuels Gold's Rise Amid Middle East Tensions and US Election Concerns
On the geopolitical front, escalating tensions in the Middle East and uncertainty surrounding the upcoming US Presidential election are also driving up gold prices. The tight race between Donald Trump and Kamala Harris has added to the unpredictability, prompting investors to seek the safety of gold. As a result, this increased demand has pushed gold prices to a new all-time high.
The situation in the Middle East intensified after the Israeli military confirmed the death of Hamas leader Yahya Sinwar, following a long pursuit. Additionally, Hezbollah, backed by Iran, has escalated its conflict with Israel, further heightening regional instability. Hence, these geopolitical tensions have had a stronger impact on market sentiment, with investors focusing more on safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues its upward momentum, rising by 0.39% to trade at $2,704.52. Currently, the pivot point stands at $2,720, a key level to watch as it could determine whether gold pushes further into resistance zones. Immediate resistance is at $2,714.04, followed by stronger barriers at $2,723.35 and $2,733.55. A successful breach of these levels would set the stage for a continuation of the bullish trend.
The 50-day EMA, currently at $2,671, provides solid support, underpinning the broader uptrend. On the downside, immediate support is found at $2,684.56, with further backing at $2,673.03 and $2,660.17. Should gold prices fall below these levels, a deeper retracement could materialize.
The Relative Strength Index (RSI) stands at 66, suggesting the metal is nearing overbought conditions, but still has some room to rally before facing significant selling pressure. Traders eyeing this level may see opportunities to buy on dips, particularly if prices remain above the $2,696 mark. A break below $2,685, however, could trigger a more bearish sentiment.
Conclusion:
The technical outlook suggests buying above $2,696, targeting the $2,720 pivot with a stop loss set at $2,685. Gold remains bullish, supported by strong technical indicators, but traders should be mindful of resistance levels and overbought signals from the RSI.
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