Daily Price Outlook
During the Asian session on Wednesday, the gold prices (XAU/USD) maintained their upward trajectory, continuing to gain positive momentum. However, this upward trend can be attributed to the decline in US Treasury bond yields, which is putting pressure on the US dollar and providing some support to gold price. Meanwhile, the growing concerns about a potential economic recession and geopolitical risks are further bolstering the appeal of gold as a safe-haven asset.
Multiple Factors Driving Increased Investment in Gold
It's worth noting that several factors are driving people to invest in gold. One key factor is the concern of a potential economic downturn, which was exacerbated by disappointing economic data from Europe. Furthermore, concerns regarding conflicts in the Middle East, particularly the Israel-Hamas situation, are increasing the appeal of gold as a safe-haven asset.
Moreover, the decline in US Treasury bond yields is exerting downward pressure on the US dollar and bolstering gold prices. It shoud be noted that the 10-year US Treasury yield had recently surpassed 5%, a level not witnessed since 2007, but has subsequently retreated from that point. Hence, These factors are contributing to the upward performance of gold (XAU/USD).
Federal Reserve's Interest Rate Impact and US Economic Resilience on Gold Price Outlook
Furthermore, the gold prices has been influenced by the potential for the Federal Reserve to raise interest rates. This is making investors cautious and limiting the upward potential for Gold. On a positive note, the US manufacturing sector recently rebounded after a five-month decline, and service-related businesses are also showing modest growth. This indicates that the US economy remains relatively robust.
Therefore, the Federal Reserve is likely to maintain its current policies in place in November. However, there is a chance that they might opt for a 25 basis point interest rate increase before the year's end, a development closely monitored by investors. This type of policy tightening could affect the prices of various assets, including Gold.
Key Events Ahead
Looking forward, investors are awaiting Jerome Powell's statements at the Federal Reserve, as they could provide insights into potential interest rate changes. Plus, investors are also closely monitoring the upcoming US third-quarter economic report and the European Central Bank's decision on interest rates.
GOLD (XAU/USD) - Technical Analysis
On October 25, gold exhibited a minor upward movement, registering a modest increase of 0.01%, with its price settling at $1972.25. Analyzing its price trajectory on a 4-hour chart provides a clearer picture of its potential path forward. Gold's pivot point stands firmly at $1962, a level that traders are closely monitoring.
Gold faces formidable resistance levels, starting at $2016, progressing to $2051, and further stretching to a significant $2105. Conversely, should the asset face selling pressures, immediate support is found at $1927, followed by deeper support levels at $1873 and $1837.
Technically, the Relative Strength Index (RSI) for gold is at 56, suggesting a slightly bullish momentum, as it's above the neutral 50 mark but still under the typically overbought threshold of 70. The MACD, however, paints a different picture. With a value of -2.67 and a signal line at 6.64, the MACD line's position below the signal line indicates possible bearish momentum in the near term. Interestingly, gold's current price surpasses its 50-Day Exponential Moving Average (EMA) which stands at $1948, reinforcing the short-term bullish trend.
While the chart patterns need further clarity, the overall sentiment surrounding gold appears bullish, especially if it maintains its position above the pivotal $1962 mark.
In the broader scheme, gold's trajectory appears bullish, provided it remains above the $1962 benchmark. Market participants are eagerly anticipating potential tests of the resistance levels, particularly eyeing the $2016 mark in the short term.
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