GOLD Price Analysis – Oct 08, 2024
Daily Price Outlook
Gold price (XAU/USD) is unable to stop its downward trend and remains under pressure, nearing the $2,630 support level. The main reason for this decline is Friday's strong US jobs report, which showed a resilient labor market. This data has led investors to scale back expectations for a major interest rate cut by the Federal Reserve, reducing the appeal of non-yielding assets like gold.
Despite this, a slight drop in the US Dollar and concerns over escalating tensions in the Middle East could still support gold. Traders are cautious ahead of key events this week, including the release of the FOMC minutes on Wednesday and US inflation data (CPI and PPI) later in the week, which could impact gold’s direction further.
US Economic Indicators and Geopolitical Tensions Influencing Gold Prices
On the US front, the broad-based US Dollar weakened slightly, but a strong US jobs report from September has reduced expectations for an aggressive rate cut by the Federal Reserve. The report highlighted a strong labor market, causing investors to scale back their bets on significant interest rate cuts, which has hurt demand for gold, a non-yielding asset. According to the CME's FedWatch tool, there is now an 85% chance of a 25 basis points rate cut at the next Fed meeting in November.
Meanwhile, Fed officials, like Minneapolis President Neel Kashkari, indicated that risks have shifted from high inflation to potential rising unemployment. St. Louis Fed President Alberto Musalem also supported further interest rate cuts depending on economic performance. Traders are also cautious ahead of key US inflation data (CPI and PPI) and the FOMC meeting minutes, both due this week, which could further influence gold prices.
Therefore, the US jobs report and shifting Fed policy expectations have weakened gold demand due to reduced interest rate cut bets. However, rising geopolitical tensions may provide some support for gold as a safe-haven asset amid uncertainty in the market.
Escalating Geopolitical Tensions and Economic Concerns Impacting Gold Prices
On the geopolitical front, tensions are escalating as Hezbollah launched rockets at Israel’s Haifa port and a military base near Tel Aviv, prompting Israel to respond with airstrikes on buildings in southern Beirut. Investors are worried that these conflicts could spread, which may boost gold's appeal as a safe-haven asset and help limit further losses in its price.
In addition, China's National Development and Reform Commission (NDRC) warned of increasing downward pressure on the Chinese economy. Traders are now focused on upcoming economic data, starting with the release of the FOMC meeting minutes on Wednesday. This will be followed by key US inflation figures on Thursday and Friday, which could significantly impact market sentiment and influence gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,641.84, slightly down by 0.04% in the current session. After encountering strong resistance at $2,651—marked by the 50-day Exponential Moving Average (EMA)—the yellow metal has struggled to gain momentum. Price action remains within a tight range, as traders look for catalysts to determine the next direction.
On the 4-hour chart, gold is hovering just below the pivot point at $2,645, indicating a lack of clear directional bias. Immediate resistance lies at $2,656, followed by $2,663 and $2,670. Breaking above these levels could trigger a short-term bullish trend. However, with the Relative Strength Index (RSI) sitting at 46, there’s limited bullish momentum, and gold could remain under pressure in the short term.
Conversely, if prices break below immediate support at $2,631, gold could see further declines, with subsequent support levels at $2,624 and $2,617. The market remains sensitive to macroeconomic indicators, with the upcoming U.S. Consumer Price Index (CPI) report likely to have a significant impact on gold prices.
Traders are advised to monitor key price levels closely. A move below $2,631 may signal a deeper correction, while a sustained break above $2,656 could pave the way for a potential recovery.
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