Created on October 17, 2024

• During my analysis of the gold market, the first thing that I notice is that we touched the $2685 level, an area that previously was the swing high and the all-time high in the market, but we did retreat from there.
• When we opened up the trading session on Wednesday, it looked like we were going to take off and smash through that high, but we have given back some of these gains, showing that perhaps some of the panic is starting to subside.

The reason I say it’s panic is that we started to see the stock markets in the United States pull apart rather rapidly at the open, and at the same time started to see gold take off to the upside. That being said, the market is still very much in an uptrend, so I don’t necessarily think that we need to see some type of panic break out. Rather, I think that we just need to see a lot of the same behavior that has been the case for a while. There are plenty of fundamental reasons for gold to continue going higher, so therefore I think this continues to be a bit of a “one-way trade” as things continue to look the same as they did a few months ago.

Fundamental Reasons for Gold to Continue Higher

There are plenty of fundamental reasons for gold to go higher, not the least of which of course would be the geopolitical issues that currently plague the markets right now, including the hot war in Ukraine, the hot war in Lebanon and the various other areas of tension around the world. Furthermore, we also have central banks around the world cutting rates, so that of course means that bonds won’t pay as much in the way of payments anymore, meaning that storing gold will be more palatable. Beyond that, we have a lot of concerns as to whether or not we need to find some type of safety in general, as markets look very shaky, that means that gold could very well be a safe haven for a lot of portfolios.

I am a buyer, and I recognize that short-term pullbacks are more likely than not going to be buying opportunities. It is not until we break down below the 50 Day EMA that I would start to worry about the overall trend, but even then, I think we have quite a bit more damage necessary to start shorting.

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• Silver price may regain its ground as lower US Treasury yields boost the attractiveness of precious metals.
• The non-yielding Silver may appreciate as multiple banks are widely expected to deliver interest rate cuts.
• Safe-haven Silver may strengthen as Israel escalates its airstrikes on Lebanon.

Silver price (XAG/USD) dips slightly after two days of gains, trading around $31.60 per troy ounce during Thursday’s Asian session. However, the non-yielding Silver received support from lower yields on US Treasury bonds. 2-year and 10-year yields on US Treasury bonds stand at 3.94% and 4.03%, respectively, at the time of writing.

Market expectations are leaning toward a total of 125 basis points in rate cuts by the US Federal Reserve (Fed) over the next year. According to the CME FedWatch Tool, there is a 94.1% chance of a 25-basis-point rate cut in November. Lower interest rates enhance the attractiveness of precious metals like Silver.

In addition, the European Central Bank (ECB) is widely expected to announce a 25-basis-point reduction in both the Main Refinancing Operations and the Deposit Facility Rate in its policy meeting later in the day. Recent inflation data also suggests that the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ) may follow suit with potential rate cuts next month.

Silver prices may receive additional support from safe-haven flows due to escalating tensions in the Middle East. On Wednesday, Israel intensified its airstrikes on Lebanon, including an attack that destroyed the municipal headquarters of a major town, resulting in the deaths of 16 individuals, including the mayor. This marks the largest assault on an official Lebanese state building since the onset of the Israeli air campaign, according to Reuters.

US President Joe Biden is indicating a new willingness to leverage US military assistance to Israel, using it as both an incentive and a deterrent in its critical confrontation with Iran and Iran-backed militant groups. This strategy may increase Washington’s influence over Israeli decision-making.

• Gold price flirts with record highs, awaiting US Retail Sales data for next push higher.    
• The US Dollar retreats after rallying on a Trump victory optimism, as China worries linger.
• Gold price’s daily technical setup points to more upside, with $2,700 in sight.

Gold price is consolidating gains near record highs in Asian trading on Thursday, trading in the green for the third day in a row. Gold buyers now look to the US Retail Sales data for the next push higher.

Gold price awaits US data, as China stimulus disappoints

Gold price is capitalizing on a renewed pullback in the US Dollar (USD) across the board even as risk sentiment takes a hit on disappointing China’s property market support measures. China’s Housing Minister announced that Beijing will “increase the credit scale of white-list projects to four trillion” yuan by the end of the year and and help renovate a million homes.

However, these latest measures by China to shore up the struggling sector failed to impress local equities, as the major Chinese benchmark indices trim early gains. Further, China’s economic woes could continue to act as a headwind to Gold price, as the dragon nation is the world’s top yellow metal consumer.

Additionally, a modest uptick in the US Treasury bond yields also check the Gold price upside. Meanwhile, markets are resorting to profit-taking on their USD longs heading into the high-impact economic data release of this week – the US Retail Sales report.

The US Dollar extended its recovery rally into Wednesday on increased expectations that the Republican nominee Donald Trump will likely win the US presidential race, as we remain a few weeks away from the November 5 elections.

The focus has recently shifted toward the US elections, which has largely contributed to the ongoing US Dollar advance, as Trump’s fiscal and trade policies are seen as inflationary and positive for the Greenback.

Meanwhile, a 25 basis points (bps) interest-rate cut by the US Federal Reserve (Fed) in November is a done deal. Therefore, the US Retail Sales data are unlikely to alter these expectations. However, it could impact the market’s pricing of another rate cut in December.

That said, risk trends will continue to play their part in driving the Gold price action alongside US macro news, Fedspeak and Trump optimism.

Gold price technical analysis: Daily chart

Gold price closed Wednesday’s trading above the key $2,670 resistance and flirted with the record high at $2,686.

The 14-day Relative Strength Index (RSI), points north above the midline, suggesting that there is more room to the upside.

A sustained break above the all-time high of $2,686 will trigger a fresh advance to the $2,700 round level.

Further up, buyers could challenge the $2,750 psychological barrier.

On the downside, the immediate support aligns at $2,670, the previous resistance now turned support.

Acceptance below that level will expose sellers to the key 21-day Simple Moving Average (SMA) support at $2,646.

Ahead of that the previous day’s low of $2,659 could test bullish commitments.

Gold Prices Under Pressure Amid China’s Stimulus

China’s Economic Data and XAU/USD Impact

Dovish Fed and Weak U.S. Dollar Keep XAU/USD Afloat

XAU/USD Technical Analysis: Key Levels to Watch

Conclusion

200-Day MA is Key

Nonetheless, the 200-Day MA is a little lower than the 61.8% retracement at 2.25. Therefore, there is a chance it will be tested as support before the current retracement completes. The recent rally following the initial double bottom breakout accelerated following the first test of support at the 200-Day line.

A breakout of the 200-Day line that triggered on September 11, a day before the double bottom triggered. The current decline would be the first larger swing test of support around the 200-Day line. If natural gas can continue to hold above the 200-Day line following the correction it has a chance to eventually test the top trendline again and possibly break through it. That’s the bigger picture.

Holding Around Support of 50-Day MA

Alternatively, since support is being seen around the 50-Day MA today, although there are no signs yet of buyers stepping up to lead to a bullish reversal, it is a potential area of interest. It could lead to a bounce if today’s low is not broken. As of today’s low, the price of natural gas has corrected by 21.9% from the 3.02 swing high.

Remains Inside Large Symmetrical Triangle Pattern

Since natural gas has been trading inside a developing large symmetrical triangle pattern there is a risk it continues to decline to eventually test support around the bottom boundary line of the pattern. For now, the 78.6% retracement level at 2.12 can be used as a proxy for the lower trendline. Note that the bottom line of the triangle was redrawn after the August 27 low that created the second bottom of the double bottom pattern.

For a look at all of today’s economic events, check out our economic calendar.

• XAG/USD climbs to $31.74, driven by falling US Treasury yields and stronger risk sentiment in the market.
• Momentum favors bulls, with RSI clearing key resistance, suggesting further upside potential towards $33.00.
• Key support lies at $31.60, with a break below potentially leading Silver to retest the $30.76 level.

Silver prices climbed on Wednesday as US Treasury yields fell, a tailwind for the non-yielding metal. An improvement in risk appetite underpins the precious metal sector, pushing the grey metal to hit a seven-day high at $32.17. At the time of writing, XAG/USD trades at $31.74 and gains more than 0.85%.

XAG/USD Price Forecast: Technical outlook

After diving almost vertically from a year-to-date (YTD) peak of $32.95 to $30.12 in three days, Silver is recovering, with buyers eyeing a test of $33.00.

The momentum remains constructive, supporting bulls as shown by the Relative Strength Index (RSI. The RSI cleared the 55 peak with enough room to spare before turning overbought.

Hence, Silver’s path of least resistance is tilted to the upside. The first resistance would be the $32.00 figure, followed by today’s high at $32.17. Once those levels are surpassed, the next stop would be the May 20 swing high at $32.51 before challenging the YTD high at $32.95.

Conversely, if XAG/USD slips below $31.60, Silver could drop to the weekly low of $30.76. This clears the path to an October 8 low of $30.12 if surpassed.

XAG/USD Daily Chart