Technical Analysis

GOLD Price Analysis – Oct 26, 2023

By LonghornFX Technical Analysis
Oct 26, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

The price of gold (XAU/USD) has maintained its upward trajectory, rising for the second consecutive day during the first half of the European trading session. This precious metal, regarded as a safe-haven asset, has surged to its highest level since May 16, a level reached last Friday. However, the reason for its upward rally can be linked to the concerns about a escalation in the conflict between Israel and Hamas. Conversely, the increase in US Treasury bond yields, fueled by expectations of a more assertive stance from the Federal Reserve (Fed), has pushed the US Dollar to a three-week peak. This was seen as one of the key factors that has exerted downward pressure on gold and limited its gains.

Moreover, investors are anticipating key economic reports from the United States. These reports will provide insights into the Federal Reserve's future decisions regarding interest rates, and they will play a significant role in determining the near-future trajectory of the gold price. On Thursday, the US is set to release crucial data, including Q3 GDP figures, Durable Goods Orders, the usual weekly Initial Jobless Claims, and Pending Home Sales statistics.

These reports, coupled with an anticipated speech by Fed Governor Christopher Waller and developments in US bond yields, have the potential to impact the value of the US Dollar. Traders will be closely monitoring these factors to identify short-term trading opportunities with XAU/USD.

Gold Prices Supported by Geopolitical Concerns Amid Escalation in Israel-Hamas Conflict

Despite the increase in US Treasury bond yields and the strengthening of the US Dollar (USD), gold prices continue to find support due to ongoing geopolitical concerns. Israel has escalated its military operations in Gaza, and the potential for a ground invasion increases the risk of a broader conflict in the Middle East. Various international powers are actively engaged in diplomatic efforts to de-escalate the ongoing conflict between Israel and the Palestinian militant group, Hamas. Consequently, the safe-haven gold has approached its most elevated level since May 16, which was reached last Friday.

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

GOLD (XAU/USD) - Technical Analysis

As the world watches the tumultuous dance of numbers on the stock exchange, Gold's resolute march demands attention. Recently trading at a commendable price of $1988.770, marking an increase of 0.45% in the last 24 hours, the precious metal reveals a story that's as old as commerce itself, yet as current as the 4H chart it's mapped on.

The pivot point, often the traders' North Star, stands steady for Gold at $1986. Resistance levels, the metaphorical ceilings to Gold's ascension, have been meticulously mapped out. The immediate barrier stands at $1998, but should Gold's rally remain unbridled, the subsequent resistances to watch are $2012 and then $2023. Conversely, if the winds turn south, the immediate cushioning for Gold is at $1963, followed by defenses at $1947 and $1932.

The Relative Strength Index (RSI) provides a snapshot of the momentum, with its current value at 67. This suggests a bullish sentiment since the RSI is above 50 but is nearing the overbought threshold of 70. Traders should tread with caution as values nearing 70 often indicate a potential pullback.

Gold's overall trend seems bullish, especially when it sustains above the $1986 mark. Any downward movement below this might hint at a bearish reversal. In the immediate future, given the current trajectory and market sentiments, it wouldn't be surprising to see Gold testing the resistance at $1998, and possibly beyond.

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