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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