GOLD Price Analysis – Oct 04, 2024
Daily Price Outlook
Gold (XAU/USD) is currently stuck in a tight trading range between $2,654 and $2,667, despite rising geopolitical tensions in the Middle East. This consolidation suggests that investors are cautious, perhaps waiting for clearer signals before making their next move.
The stronger US dollar plays a significant role in gold's bearish trend, primarily driven by fading expectations of aggressive policy easing from the Federal Reserve.
However, if tensions in the Middle East continue to escalate or if the risk of a wider conflict increases, we could see renewed interest in gold as a safe-haven asset.
Such developments might help support its price and limit further losses, highlighting gold's enduring appeal in uncertain times.
Looking ahead, traders seem to be adopting a cautious approach, choosing to hold off on making moves in the gold market until the release of the highly anticipated US monthly employment report.
The Nonfarm Payrolls (NFP) report is expected to play a crucial role in shaping expectations around the Federal Reserve's rate-cutting timeline.
US Dollar Strengthens Amid Positive Labor Market Indicators and Fed Policy Outlook
On the US front, the broad-based US Dollar (USD) has been gaining strength, trading close to a one-month high, thanks to reduced expectations for aggressive policy easing from the Federal Reserve (Fed).
In a recent report, the US Department of Labor noted a slight uptick in unemployment benefit claims, which rose to 225,000 for the week ending September 28, compared to 218,000 the previous week.
This increase follows a larger-than-expected rise in private-sector employment and an unexpected boost in job openings from August, indicating a stable and resilient labor market.
Moreover, the Institute for Supply Management (ISM) noted that its Non-Manufacturing PMI rose to 54.9 in September, the highest level since February 2023, suggesting a solid economic foundation in the third quarter.
Traders are now turning their attention to the upcoming Nonfarm Payrolls (NFP) report, which is expected to reveal an addition of 140,000 jobs in September, a slight dip from the previous figure of 142,000. Meanwhile, the unemployment rate is projected to hold steady at 4.2%.
This combination of encouraging labor market indicators is dampening expectations for substantial interest rate cuts by the Federal Reserve (Fed). As a result, the US Dollar is gaining strength, creating challenges for non-yielding assets like gold (XAU/USD).
Escalating Middle East Tensions Drive Investors to Safe-Haven Gold
Moreover, the ongoing tensions in the Middle East are pushing investors towards safe-haven assets like Gold (XAU/USD).
Recently, Hezbollah launched about 230 projectiles from Lebanon into Israel, leading to Israeli airstrikes on Hezbollah's intelligence headquarters in Beirut.
The Israeli military has warned residents to evacuate areas in southern Lebanon outside a U.N.-declared buffer zone, indicating a potential expansion of its ground operations against Hezbollah.
Israeli forces have already targeted around 200 Hezbollah sites across Lebanon, including weapons storage and observation posts, with explosions shaking Beirut's southern suburbs overnight.
As the conflict escalates, nearly 1.2 million people in Lebanon have been displaced from their homes. At least nine Israeli soldiers have died in clashes with Hezbollah, marking the beginning of what Israel describes as a limited ground incursion.
The situation is further complicated by reports that Israel is planning a significant retaliation against Iran, which recently launched nearly 200 ballistic missiles.
These developments increase the risk of a broader conflict, driving traders to seek safety in Gold. The uncertainty surrounding the region continues to support gold prices as investors look for secure investments amid rising tensions.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,662.35, gaining 0.27% and staying just below its pivot point of $2,663.15.
This minor upward movement indicates a cautious optimism among traders as they await the upcoming Non-Farm Payrolls (NFP) data, which could significantly impact the metal's short-term trajectory.
Immediate resistance is noted at $2,671.80, and a break above this level could push prices towards the next resistance points at $2,678.07 and $2,685.66.
On the downside, the $2,651.14 support level is pivotal, backed by the 50-day EMA at $2,651.08. If gold breaks below this level, it may extend its losses to $2,642.23 and possibly even $2,634.48.
The RSI is currently at 58, suggesting moderate bullish momentum but with room to rise further before approaching overbought territory.
For traders looking to capitalize on short-term opportunities, a buy entry above $2,665 is recommended, targeting a take-profit level at $2,677, while maintaining a stop-loss at $2,654.
This setup aligns with the expectation of bullish continuation if prices sustain above the pivot point. A successful breach above $2,671.80 would add to the bullish case, attracting more buyers and pushing gold toward the upper resistance levels.
However, if the NFP data surprises on the upside, a stronger US dollar could weigh on gold, driving it back toward support levels.
For now, gold’s short-term outlook remains cautiously bullish above $2,665, with potential for further gains if technical conditions align favorably.
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