Technical Analysis

GOLD Price Analysis – Oct 24, 2023

By LonghornFX Technical Analysis
Oct 24, 20234 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold (XAU/USD) has managed to gain momentum, rising to around $1,980 on Tuesday. This surge is largely attributed to the weakening of the US Dollar (USD), driven by lower US Treasury yields. Furthermore, the ongoing tensions in the Middle East have played a significant role in supporting the gold price. Although, the recent efforts by diplomats to ease tensions between Israel and Hamas have increased investors' willingness to take risks, potentially causing a temporary drop in gold prices.

US Dollar Weakens and Interest Rates Uncertain

It's worth noting that the US Dollar Index (DXY) has experienced a four-day consecutive decline, hovering around 105.50. However, this drop can be tied to the 10-year Treasury yield, which initially surged to 5.02% but later retreated to 4.84%. If this downward trend persists, the US Dollar may continue to weaken, potentially promoting a rise in Gold prices up to $2,000.

Several key figures within the Federal Reserve, such as Raphael Bostic, Patrick Harker, and Loretta Mester, have expressed doubts about reducing interest rates in the near future. They prefer to maintain the current rates. Furthermore, the market doesn't anticipate an interest rate hike in November, but the likelihood of one occurring in January 2024 remains quite significant, standing at over 30%.

China's Debt Plans, US-China Talks, and Data-Filled Week

Furthermore, the news of China's intention to issue a bit over 1 trillion yuan in additional government debt has fostered a more positive sentiment among investors. Additionally, the progress in the initial economic discussions between the US and China has boosted the overall market outlook. Consequently, the US Dollar, typically a safe haven for investors, is not in as high demand, leading to an increase in the price of Gold.

Looking forward, investors will have a busy week ahead with a lot of data to watch. On Tuesday, their attention will be focused on the US S&P Global PMI. Then, on Thursday, all eyes will be on the Q3 Gross Domestic Product (GDP) figures. Finally, the week concludes with a spotlight on the Core Personal Consumption Expenditures (PCE) on Friday.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD (XAU/USD) - Trade Idea

As of October 24, Gold's market landscape presents a complex array of signals for the discerning analyst. Priced at 1976.10, the precious metal has seen an incremental rise of 0.14% over the past 24 hours. The 4H chart, a timeframe favored by many traders for its balance between short-term responsiveness and noise filtering, provides several key insights.

Central to our analysis is the Pivot Point, a crucial price level to observe, currently at $1963.12. From this juncture, Gold encounters a layered resistance structure: Immediate resistance is at $2016.85, followed by $2051.94 and then $2104.57. Conversely, in the face of bearish tendencies, immediate support is pinpointed at $1926.93, with further levels at $1873.20 and $1838.12.

The technical indicators offer a deeper comprehension. The RSI, a momentum oscillator, currently stands at 62. Traditionally, values above 70 are deemed overbought, and those below 30, oversold. With the RSI surpassing the 50-mark, this suggests a bullish sentiment in the market.

Our MACD values, a further momentum metric, are compelling. The MACD is at -2.79 while the Signal sits at 11.57. Typically, an MACD line above the signal line indicates upward momentum, and the opposite holds true for a potential downward shift. In this instance, the MACD line being beneath the signal line hints at a potential downward trajectory.

The 50 EMA, a favored metric for short-term trends, is currently at 1940.29. With Gold's price exceeding this mark, it suggests a short-term bullish trend.

Regarding chart patterns, the current 4H chart doesn't display dominant patterns like the Symmetrical Triangle or an upward channel. However, patterns can form and fade swiftly, necessitating vigilant observation.

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