Potential Bearish Signals in Gold Futures

Gold’s recent price reversal could trigger a short-term correction, with a break below $2,731.63 likely confirming this bearish chart pattern. If the reversal plays out, we expect gold to test the $2,708.76–$2,697.28 support zone over the next few sessions. A decisive break below this range could accelerate selling toward the 50-day moving average of $2,624.71. Conversely, if prices push above the recent high of $2,790.17, this would negate the reversal, resuming the broader uptrend and supporting gold’s bullish momentum.

Gold Recovers on Profit-Taking and Election-Driven Demand

After profit-taking hit the market on Thursday, pushing gold 1.5% lower, prices rebounded as investors awaited economic insights from the U.S. jobs data. Despite the recent pullback, gold remains up 4% in October as uncertainty ahead of the Nov. 5 U.S. presidential election sustains demand for safe-haven assets.

Traders have kept a close watch on political and economic indicators, with the gold market responsive to any shifts in polling between Donald Trump and Kamala Harris, as the race tightens. Additionally, Citi projects gold may reach $3,000 per ounce within six months, citing labor market concerns and sustained ETF inflows as key drivers.

Dollar, Treasury Yields Stable Before Jobs Data Release

The U.S. dollar held steady on Friday, supported by a series of economic data suggesting robust underlying economic conditions despite anticipated Fed rate cuts.

The October NFP report is expected to show an increase of roughly 100,000 jobs, a slowdown from September’s 254,000 figure. Analysts, however, caution that external factors, such as recent hurricanes, could weigh on the numbers.

Treasury yields were flat, with markets largely pricing in a 25-basis-point rate cut at the Fed’s November meeting. Dollar strength remains a central theme, supported by reduced expectations for aggressive rate cuts.

Next Lower Target is 2.65, Followed by 2.58

The next lower target is the 38.2% Fibonacci retracement at 2.65. A decline below today’s low will signal a likely move to that price level. Nonetheless, a lower and what looks like a potentially more significant target zone is from 2.58 to 2.55. That range consists of a previous interim swing high and the 20-Day MA, respectively. Also, within that range is the 50% retracement level at 2.57. If that price zone is broken to the downside, then watch for support around the 61.8% Fibonacci retracement at 2.48, along with the 50-Day MA at 2.45.

Successful Test of 200-Day MA is Bullish

Recently, natural gas successfully tested the 200-Day MA as support. The 200-Day line was recaptured on September 11. Other than a quick test of support a week after the initial breakout, there has been no subsequent test of the 200-Day line as support. It can be considered as a maximum support level before the potential of natural gas in the foreseeable future starts to change. Staying above the 200-Day line during weakness would indicate strength overall given its long-term nature.

Higher Swing Lows Point to Underlying Strength

Moreover, notice how bullish momentum has been improving overall in recent months as represented by the higher swing lows and accompanying trendlines. If the higher internal trendline that connects the recent swing low fails as support, the potential for an eventual bullish breakout of the triangle diminishes or it may take longer to occur. The top triangle trendline is significant as it connects five swing highs. This means it may continue to offer strong resistance, or a bull breakout triggers with momentum spiking – a possibility.

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Resistance Zone From 71.83 to 73.21

Next up, there is a potentially significant resistance zone a little higher, starting from 71.83 and rising to 73.21. The higher level is the 50% retracement, which should be watched in concert with the most recent interim swing high at 73.15. The price range starts with the 38.2% Fibonacci retracement level. Also, included with the range is potential resistance around the 50-Day MA at 71.96, and the 20-Day MA at 72.27.

Nonetheless, the 73.15 swing high is the key pivot as a breakout above starts to reverse the price structure of the short-term downtrend. A bull breakout above 73.15 would provide a renewed sign of strength once there is a daily close above it. Further, the moving average trend indicators would have been exceeded by then.

Consolidation Pattern May Be Evolving

The large symmetrical triangle pattern in crude oil has been discussed before. A bearish breakdown triggered at the beginning of September, and it was followed by a bullish reversal that rose back into the pattern. Subsequently, another breakdown from the pattern triggered. Given that crude continues to chop around it is possible that the consolidation pattern has evolved into a larger triangle.

That may account for the lack of follow-through. Nevertheless, it is not clear yet. The initial lower boundary line of the triangle, that is now around the 61.8% Fibonacci retracement level at 74.60, may continue to provide insights if it is approached again. The question is, will it lead to a bearish reversal or a bullish breakout?

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

XAU/USD Current price: $2,739.91

• US Dollar demand resurged following another batch of encouraging American data.
• The US will release the October Nonfarm Payrolls report on Friday.
• XAU/USD shed roughly $50.00, and near-term readings suggest the slide could continue.

Spot Gold came under strong selling pressure after Wall Street’s opening, with XAU/USD retreating sharply from record highs and currently trading near a daily low of $2,731.45. A risk-averse mood took over financial markets on Wednesday when United States (US) data showed resilient economic growth and a healthy labour market, cooling interest rate cut expectations.

The Federal Reserve (Fed) will meet next week and announce its decision on monetary policy on Thursday, November 7. Odds for a 25 basis points (bps) interest rate cut are at 94.5%, slightly down from the 95.5% chance a week earlier. Still, market players ponder whether a Republican victory in the upcoming presidential election may force the Fed to slow the pace of loosening.

Meanwhile, the Bank of Japan (BoJ) decided to keep the interest rate target unchanged at 0.25% on Thursday and reiterated its forecast that inflation will persist near the 2% target. The announcement weighed on the Japanese Yen (JPY), providing support to the US Dollar.

Finally, the US reported that Initial Jobless Claims for the week ended October 25 improved to 216K from a revised 228K in the previous week. The country also released the September Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. PCE inflation was up 2.1% YoY and 0.2% MoM, as expected, while the core annual reading hit 2.7%, higher than the 2.6% anticipated by market participants.

Asian and European indexes edged sharply lower, leading to a second consecutive day of sharp losses in Wall Street.

The focus now shifts to the US Nonfarm Payrolls (NFP) report, which will be released on Friday. The economy is expected to have added 113K new job positions in October, while the unemployment rate is foreseen steady at 4.1%.

XAU/USD short-term technical outlook  

The XAU/USD pair trimmed most of its weekly gains, and the daily chart shows the corrective decline may continue, albeit the pair is far from bearish. In the daily chart, technical indicators retreated sharply from overbought readings and head firmly south above their midlines. At the same time, the pair remains above all its moving averages, which maintain their bullish slopes. The 20 Simple Moving Average (SMA) currently develops at around $2,696.00, providing dynamic support.

In the near term, and according to the 4-hour chart, the risk skews to the downside. XAU/USD broke below its 20 SMA, which lost its bullish strength at around $2,766.00. Nevertheless, the 100 and 200 SMAs keep heading firmly higher, well below the current level. Finally, technical indicators crossed their midlines into negative territory, maintaining their sharp downward slopes, in line with another leg lower.

Support levels: 2,731.45 2,716.90 2,701.70

Resistance levels: 2,747.75 2,760.40 2,772.50

From October 31 through November 6, weather systems are expected to bring cooler temperatures across parts of the western and central U.S., with highs ranging between the 40s and 60s Fahrenheit. Meanwhile, the southern and eastern U.S. will experience milder weather with highs in the 60s to 80s, and occasional peaks in the 90s in isolated areas. These conditions contribute to an overall light demand profile for natural gas this week.

Anticipated Storage Report Adds Bearish Pressure

The U.S. Energy Information Administration’s (EIA) weekly natural gas storage report, due later Thursday, is also expected to pressure prices downward. Analysts expect a substantial inventory build, with estimates clustered around an 84 billion cubic feet (Bcf) injection. This projection significantly exceeds the five-year average build of 67 Bcf, underscoring a supply surplus amid mild weather that limited consumption in recent days.

If the EIA confirms a build near 84 Bcf, it would mark a notable increase, pointing to ample supply levels as the market heads into the winter season. With production steady and wind energy contributing robustly to electricity generation, less natural gas is currently needed to meet power demands. The market outlook remains sensitive to inventory levels, with larger-than-average injections creating a bearish outlook as they continue to weigh on prices.

Market Forecast: Bearish Outlook

Given the warmer weather outlook, lighter-than-normal demand, and anticipated storage injection above seasonal norms, the short-term outlook for U.S. natural gas prices remains bearish. Unless colder weather patterns emerge, price recovery may be limited in the near term as supply continues to outpace demand. Traders should monitor upcoming weather model updates and next week’s EIA storage data closely, as any significant deviations from current forecasts could drive volatility in either direction.

• Silver prices depreciate for the second consecutive day to approach support at $33.10.
• A softer US Dollar is keeping precious metals from retreating further.
• Confirmation below $33.10 would increase bearish pressure toward $32.10.

Silver Prices (XAG/USD) are trading lower for the second consecutive day on Thursday, with price action approaching a key support area at $33.10.following Wednesday’s reversal at the $34.50 area.

The lower high posted on Wednesday and price action breaking below the 4 H 50 SMA suggest that the pair might have reached the end of its bullish cycle and is ready for a corrective reversal.

On the other hand, the US Dollar is showing a moderately bearish tone over the last sessions.  This will likely keep precious metals from retreating further until the US PCE prices index and especially Friday’s NFP report are out. 

A clear break of the previous resistance, now turned support at the mentioned $33.10 area would confirm that view and add selling pressure towards the 38.6% Fibonacci retracement of the September-October bullish run, at $32.10 ahead of $31.30.

To the upside, resistance levels remain at $34.50, and the long-term high, at $34.85.
 

Created on October 31, 2024

• Gold prices breached the $2800 per ounce barrier on Wednesday, hitting a new all-time high as uncertainty surrounding the US elections and geopolitical tensions fuelled demand for the safe-haven asset.
• At the time of writing, the most active December gold contract was trading at $2799.70 per ounce, up 0.7% from the previous close.
• The contract had earlier hit a new all-time high of $2801.65 per ounce.

Meanwhile, US Treasury yields fell, boosting demand for non-yielding commodities such as gold and silver. According to gold trading platforms, the rise in gold prices comes ahead of next week’s US presidential election and the Federal Reserve’s policy meeting. Furthermore, gold bulls remained resilient in the face of expectations that bets on interest rate cuts by the Fed will decline.

The US central bank cut interest rates by 50 basis points in September, fuelling expectations of a similar cut in November. However, hotter-than-expected inflation and a resilient US Labor market have since reduced bets on a similar rate cut. According to the CME FedWatch tool, traders are pricing in a 98.9% chance of the Fed cutting rates by 25 basis points at its meeting next week.

Uncertainty Surrounding US Elections

The increased uncertainty surrounding the outcome of next week’s US elections has bolstered demand for the safe-haven gold. Polls and analysts expect a close contest between former President Donald Trump and Vice President Kamala Harris. The candidates have outlined different plans for the US economy, which has increased uncertainty about the political scenario in the United States. Investors will be closely monitoring the election results next week as they could shape US policy for the next four years.

Geopolitical Tensions Escalate

Reports on Tuesday highlighted casualties from an airstrike, following recent military actions in the region. These developments have heightened tensions in the Middle East, with analysts noting increased geopolitical risks. This has contributed to the bullish sentiment for the safe-haven XAU/USD pair, despite the strength in US Treasury yields and the US dollar.

Economic Data in Focus

Investors will focus on the release of US third-quarter GDP data on Thursday. Also, the jobless claims report will be released on Thursday, which will provide further signals on the health of the US economy. In addition, the US personal consumption expenditure index will be released on Friday. The data is the Federal Reserve’s preferred measure of inflation. US non-farm payrolls data is also scheduled to be released on Friday. If the data points to a resilient US economy, the Federal Reserve may stick to smaller US interest rate cuts in its upcoming meetings. However, any rate cuts bode well for gold as it is a non-yielding asset.

Gold Price Analysis and forecast Today:

According to gold analysts today, the overall trend for the gold price will remain bullish and there is a strong chance of testing the historical psychological level of $2800 per ounce. There could be more to come if the factors driving gold gains persist, including increasing global geopolitical tensions and the abandonment of tightening by global central banks. Investors are not as concerned about technical indicators moving towards oversold levels as they are about monitoring the continued factors driving gold gains. Ultimately, no significant profit-taking will occur without a resolution to global tensions.

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• Silver price may regain ground due to increased safe-haven demand amid uncertainties surrounding the US elections and geopolitical risks.
• The latest Reuters/Ipsos poll indicates that Harris holds a narrow lead at 46% compared to Trump’s 43%.
• Silver prices may appreciate due to safe-haven demand amid uncertainties surrounding the geopolitical tensions in the Middle East.

Silver prices (XAG/USD) extends its losses for the second consecutive day, trading around $33.60 during the Asian hours on Thursday. However, the downside of the Silver price could be restrained amid increased demand for safe-haven assets amid uncertainties surrounding the US elections and geopolitical risks.

Former President Donald Trump has made gains among Hispanic men as the November 5 US presidential election approaches, where he will face Democratic candidate Kamala Harris. According to an analysis of Reuters/Ipsos polling, Trump is now trailing Harris by only 2%, with support at 44% compared to her 46%.

Meanwhile, Harris has seen increased support among white women. In late 2020, white women favored Trump over Biden by 12%, but now they lean Republican by a margin of 3%. The race between the two candidates is extremely close, with Harris holding a slight lead of 46% to 43% in the latest poll conducted from October 16 to 21.

Silver prices are likely to rise due to safe-haven demand as traders keep a close eye on escalating geopolitical tensions in the Middle East. This comes in the wake of Israel’s military chief warning of a “very hard” strike on Iran if missile attacks continue. Lebanese Prime Minister Najib Mikati mentioned on Wednesday that US envoy Amos Hochstein indicated a possible ceasefire in the Israel-Hezbollah conflict could be achieved before the U.S. elections on November 5.

Additionally, investors are looking forward to China’s parliamentary meeting scheduled for November 4-8, where announcements regarding potential stimulus measures from Beijing are anticipated. Reports indicate that China is considering a stimulus package exceeding 10 trillion Yuan to boost its economy.

XAU/USD Current price: $2,786.10

• United States data confirmed the country’s economic resilience.
• Focus on the US presidential election and the Federal Reserve’s decision next week.
• XAU/USD retains its bullish strength despite overbought, $2,800 at sight.

Gold traded as high as $2,789.72 a troy ounce on Wednesday, a fresh record high. XAU/USD retreated after Wall Street’s opening but met buyers at around $2,770 and approaches the aforementioned high en route to unexplored territory.  

The US Dollar (USD) reacted positively to the first batch of United States (US) data, surging after an upbeat ADP report on private job creation showed the sector added 233K new positions in October, much better than the 115K expected. The Greenback retained its strength following the release of the Q3 Gross Domestic Product (GDP) preliminary estimate, showing that the economy grew at an annualized pace of 2.8%, below the 3% expected and the previous, yet still far from concerning.

Finally, the US reported an uptick in inflation in the three months to June, as the core Personal Consumption Expenditures (PCE) Price Index rose by 2.2%, easing from the previous 2.8% but above the 2.1% expected.

Employment, growth, and inflation all fell within a tolerable range, resulting in little relevance to the upcoming Federal Reserve’s (Fed) monetary policy decision next week. In the end, market players welcomed the figures. As a result, the USD came under selling pressure while Wall Street trimmed pre-opening losses, and the three major indexes turned positive.

Meanwhile, uncertainty surrounding the outcome of the US presidential election keeps boosting demand for Gold and buyers take their chances on intraday deeps. Demand for Gold will likely continue outpacing that of the USD in risk-averse scenarios, while also gaining when the latter weakens.

The US will release the September PCE Price Index on Thursday, although it may have a limited impact given the quarterly figures just released within the GDP report. On Friday, the country will publish the October Nonfarm Payrolls (NFP) report.

XAU/USD short-term technical outlook  

Technically, the daily chart for the XAU/USD pair is bullish despite being overbought. The pair keeps trading above all its moving averages, with the 20 Simple Moving Average (SMA) currently at around $2,691.70. The 100 and 200 SMAs accelerated higher far below the shorter one, reflecting persistent buying interest. Finally, technical indicators entered overbought readings, partially losing their upward strength but far from showing upward exhaustion. Higher highs are still on the docket before a relevant downward correction occurs.

The 4-hour chart indicates a persistently strong upward momentum. Technical indicators resumed their advances in the overbought territory after a modest corrective decline, confirming buyers continue to take their chances on dips. At the same time, the 20 SMA accelerated north far below the current level while above the 100 and 200 SMAs. A bullish continuation beyond $2,800 is on the docket before the US election.

Support levels: 2,770.90 2,757.30 2,742.50

Resistance levels: 2,790.00 2,810.00 2,825.00

Potential for a Breakout

A decisive advance above the top line that is followed by a continuation higher indicates an initial breakout of the triangle consolidation pattern. However, subsequent price behavior is key to guard against a false breakout. Since the most recent swing high was at 3.02, it should also be considered since it is relatively nearby.

A rally above that high would further confirm strength as a prior swing will have been reclaimed. However, a daily close above it is needed to complete that breakout. That swing is part of the price structure of lower swing highs that occurred since the 3.64 peak in 2003. The top boundary line defining resistance of the symmetrical triangle formation touches those highs.

Pullback Possible

Since resistance has been seen so far, a bearish retracement may be next on the agenda. Weakness is indicated on drop below today’s low of 2.77. Also, a decline below yesterday’s low of 2.79 can be seen as a gauge. The 38.2% Fibonacci retracement is at 2.65 and it may be the first price zone to see signs of support. Lower down is possibly a more significant support zone from 2.58 to 2.56 as it marks the confluence of several levels. A prior high resistance and now possibly support was at 2.58 and it is joined by the 50% retracement at 2.57 and the 20-Day MA at 2.56.

Lower Support Levels

Price behavior around the 20-Day line will likely provide the most value as it helps identify support of the near-term trend. It has been trending down since a little before the last swing low. However, the 50-Day MA has been trending up since mid-September and is now at 2.44. If natural gas breaks below the 20-Day MA and continues lower the 50-Day line becomes a potential target. Moreover, the 61.8% Fibonacci retracement can be watched as well at 2.48.

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