Technical Analysis

GOLD Price Analysis – Oct 29, 2024

By LonghornFX Technical Analysis
Oct 29, 20244 min
Gold

Daily Price Outlook

Gold prices (XAU/USD) prolonged their upward trend and remained well-bid around above the $2,750 mark.

However, the ongoing safe-haven demand driven by tensions in the Middle East and uncertainties surrounding the upcoming US elections is keeping interest in this precious metal alive. Nevertheless, several factors are limiting gold's upward movement.

On one hand, positive economic data from the US suggests a resilient economy, which supports expectations of smaller interest rate cuts from the Federal Reserve. This, in turn, bolsters US Treasury bond yields and increases demand for the US Dollar (USD).

As a result, traders are cautious about making fresh bullish bets on gold. Moreover, many investors are waiting for key US economic reports later this week.

Impact of US Dollar Strength and Economic Data on Gold Prices

On the US front, the broad-based US dollar managed to stop its previous downward rally and regained mild traction as positive economic data indicated that the economy remains resilient.

This development supports expectations for smaller interest rate cuts by the Federal Reserve (Fed). Meanwhile, investors are cautious ahead of important economic reports this week that could shed light on the Fed's future rate decisions.

Nevertheless, a recent decline in US Treasury bond yields triggered a pullback in the dollar from its highest level since July 30, allowing gold prices to attract some dip-buyers near the $2,750 mark.

Investors are now focusing on Tuesday’s economic reports, including the Conference Board's Consumer Confidence Index and the Job Openings and Labor Turnover Survey (JOLTS). These reports, along with other upcoming economic data, will influence the Fed's interest rate outlook and impact gold prices (XAU/USD).

Therefore, the recent dollar pullback and lower Treasury yields may provide gold prices with a temporary boost, attracting dip-buyers. However, uncertainty about future Fed rate decisions and key economic reports could lead to volatility and limit gold's upward momentum.

Impact of Political Uncertainty and Global Demand on Gold Prices

On the flip side, the upcoming US presidential election is creating a tense environment as Vice President Kamala Harris and Republican nominee Donald Trump are in a close race for the White House. This political uncertainty is adding volatility to the markets, as investors weigh potential outcomes.

Besides this, the US has issued a warning to Iran at the United Nations Security Council, threatening severe consequences if Iran engages in further aggressive actions against Israel. This follows recent strikes on military targets in Iran by Israel.

Meanwhile, China's gold consumption has decreased by 11.18% in the first three quarters of 2024 compared to the same period last year, as high gold prices have reduced demand for jewelry.

This decline in consumption may further impact global gold prices, adding another layer of complexity to the market dynamics.

Therefore, the political uncertainty surrounding the US presidential election and tensions with Iran could lead to increased market volatility, potentially boosting gold's appeal as a safe-haven asset. Besides this, China's declining gold consumption may further weigh on global gold prices in the near term.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) – Technical Analysis

Gold prices are experiencing steady upward momentum, trading around $2,751.93 per ounce, a 0.34% increase on the day. The immediate resistance level lies at $2,757.89, and a successful breach of this barrier could push gold toward the next resistance at $2,771.04. If the bullish sentiment continues, traders may look for gains targeting the higher resistance at $2,778.16.

The pivot point is set at $2,764.23, a crucial marker that traders should watch closely. A sustained move above this pivot would reinforce a bullish outlook, potentially establishing new support levels.

The 50-day EMA, currently positioned at $2,737.06, provides further support and signals that the overall trend remains upward. With gold trading above this level, the technical landscape favors a bullish bias.

The Relative Strength Index (RSI) stands at 64, indicating positive momentum but staying below the overbought threshold, suggesting room for further gains without an immediate pullback.

If prices encounter selling pressure, initial support rests at $2,748.71, followed by a more substantial support level at $2,740.15. Should the decline extend, $2,730.18 offers additional support, cushioning any downside risk.

For those entering positions, the outlook remains bullish above $2,745, with suggested profit-taking around $2,765 and a stop-loss set near the 50-day EMA at $2,737.06.

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GOLD

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