GOLD Price Analysis – Sep 30, 2024
Daily Price Outlook
Despite various supportive factors, Gold XAU/USD continues to face selling pressure, trading around $2,650 after hitting an intraday low of $2,647.
This decline was driven by a shift toward risk-on sentiment, which diminishes gold's appeal as a safe-haven asset. The sentiment has been bolstered by China’s recent announcement of additional stimulus measures over the weekend.
Conversely, ongoing geopolitical risks, including the Israel-Lebanon conflict and significant political developments in Japan and the U.S., have kept some demand for safe-haven assets alive, which is helping to cushion gold from more severe losses.
Moreover, a dovish outlook from the Federal Reserve, along with a weaker U.S. dollar, is offering partial support for gold prices, easing some of the downward pressure.
China's Stimulus Measures and Market Sentiment Impact on Gold
Global market sentiment has improved significantly, particularly after the People's Bank of China announced plans to reduce mortgage rates for existing home loans by October 31.
This move follows China’s recent major stimulus package, the largest since the pandemic, which has bolstered market confidence.
Notably,, China’s official Manufacturing PMI rose to 49.8 in September from 49.1, surpassing expectations. However, the Non-Manufacturing PMI dipped slightly to 50.0 from 50.3.
Meanwhile, the Caixin Manufacturing PMI contracted to 49.3, and the Caixin Services PMI fell to 50.3, down from August’s 51.6.
Therefore, the improvement in market sentiment and China’s stimulus measures may reduce gold's safe-haven appeal, as investors seek riskier assets. However, weaker manufacturing data could still drive some demand for gold as a hedge against economic uncertainty.
Geopolitical Tensions and Their Impact on Gold Prices
On the other hand, tensions in the Middle East are heating up as Israel steps up its military operations against Iran's allies, specifically targeting the Houthis in Yemen and Hezbollah in Lebanon.
Recent Israeli airstrikes have struck various locations, including ports and power plants in Yemen, leading to the death of Nabil Kaouk, the deputy head of Hezbollah’s Central Council. His death marks the seventh Hezbollah leader killed in just over a week, highlighting the escalating conflict.
These rising tensions are likely to boost demand for gold as a safe-haven asset, especially in light of the ongoing geopolitical instability.
This increased demand may help offset the reduced appeal of gold due to China's stimulus measures, resulting in mixed pressures on gold prices in the short term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,650.58, reflecting a slight decline of 0.08% as bearish sentiment persists. The metal is struggling to break above its pivot point at $2,658.20, indicating a lack of upward momentum.
Gold faces immediate resistance at $2,666.42, followed by a stronger barrier at $2,685.82. Any move above these levels could signal a potential bullish reversal; however, with the 50-day Exponential Moving Average (EMA) positioned at $2,663.47, this area remains a significant resistance zone for gold in the short term.
On the downside, immediate support is at $2,645.13, with further levels to watch at $2,634.74 and $2,624.02.
A break below $2,645.13 could open the door to a deeper retracement, possibly testing the 200-day EMA around $2,628.98. The Relative Strength Index (RSI) is currently at 41, suggesting a bearish bias but not yet oversold, leaving room for further declines.
From a technical perspective, sellers seem to have the upper hand as long as prices remain below the $2,658 pivot level. Traders might consider short positions below this level with a target of $2,640 and a stop-loss set at $2,665.
The broader market sentiment will likely be influenced by key events like the upcoming Non-Farm Payrolls (NFP) report and Fed Chair Powell’s speech, which could inject volatility into gold prices.
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