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.
Related News
S&P500 (SPX) Price Analysis – Oct 18, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.