West Texas Intermediate (WTI) Oil price falls on Wednesday, early in the European session. WTI trades at $58.19 per barrel, down from Tuesday’s close at $58.22.
Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $62.00 after its previous daily close at $62.07.

Gold is trading higher for the fifth consecutive day on Wednesday, attempting to confirm the breach of the $4,200. The precious metal is trading at $4,193 at the time of writing, after having hit a fresh all-time high at $4,218 earlier on the day.

Bullion is drawing support from a softer US Dollar on Wednesday, following dovish comments by the Fed Chairman Jerome Powell at a speech in Philadelphia. Powell reiterated that the labour market deterioration is more concerning than inflation right now, which practically confirms a rate cut in October and raises expectations of another one in December.

Technical Analysis: No signs of a trend shift in sight 

The technical picture shows Gold skyrocketing. The pair has rallied an eye-watering 27% in less than two months, which normally leads to a correction. The 4-hour RSI is way within overbought territory. So far, however, downside attempts remain limited.

Above the $4,200 level, the 172.2% Fibonacci extension of the October 1.14 rally is at $4,235, and the 161.8% Fibonacci extension of the same cycle is at $4,300; these are the following potential targets.

Downside attempts remain contained at the previous all-time high near $4170 (Tuesday’s high). Further down, Tuesday’s low at  $4,090 and the October 8, 9 highs at $4.050 area would come into focus.

Silver price (XAG/USD) holds positive ground around $51.90 during the early Asian session on Wednesday. The white metal retreats from an all-time high after a historic squeeze in London began to show some signs of easing. However, the potential downside might be limited amid trade tensions and US rate cut expectations.

A rise in Silver price in the previous session is bolstered by concerns over a depleting silver inventory in London, which drove prices to a premium over those seen in New York and prompted traders to ship metals across the Atlantic for a profit. Nonetheless, a historic squeeze in London began to show some signs of easing, which might drag the white metal lower. 

Rising trade tension between the US and China boosts the safe-haven flows, benefiting the Silver price. US Trade Representative Jamieson Greer said on Tuesday that US President Donald Trump could slap China with 100% tariffs on November 1 or sooner, depending on Beijing’s next action in a dispute over rare earths. 

Bets the Federal Reserve (Fed) will cut interest rates twice more this year might contribute to Silver’s upside. Fed Chair Jerome Powell signaled the Fed is on track to deliver another quarter-point interest-rate reduction later this month, even as a government shutdown significantly reduces its read on the economy. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal. 

Gold keeps on making higher highs on the daily time frame, sitting close to fresh record highs below $4,200 early Wednesday.

Gold remains a ‘buy-on-pullbacks’ trade

Markets continue to witness dip-buying on every pullback in Gold so far this week, as buyers remain undeterred by the bullish sentiment on global stocks.

The latest leg up in Gold seems to be sponsored by the renewed trade tensions between the United States (US) and China after US President Donald Trump posted on social media late Tuesday that he was considering terminating business with China having to do with cooking oil, and other elements of trade, as retribution.

Meanwhile, both sides began charging tit-for-tat port fees on Tuesday, per Reuters. This followed Trump’s retaliatory threats to slap 100% tariffs on Chinese imports as the trade war escalated after China tightened controls on its rare earth exports last week.

 US-Sino trade worries combined with persistent bets for two interest rate cuts by the US Federal Reserve (Fed) render negative for the US Dollar (USD), benefiting the non-yielding bright metal.

Despite Fed Chair Jerome Powell’s prudent remarks on Tuesday, markets continue to price in over 90% probabilities for the October and the December monetary policy meetings, the CME Group’s FedWatch Tool shows.

Powell noted that the overall US economy “may be on a somewhat firmer trajectory than expected,” while also cautioning that “there is no risk-free path for policy as we navigate the tension between our employment and inflation goals.”

Further, the USD also feels the heat from a stronger Yuan (CNY) fix by the People’s Bank of China (PBOC), which surprised markets.

On Wednesday, the People’s Bank of China (PBOC) set the USD/CNY central rate at 7.0995 compared to the previous day’s fix of 7.1021 and 7.1281 Reuters estimate.

All eyes now remain on a bunch of Fed speakers for fresh policy cues amid a lack of high-impact US economic releases.

 Additionally, the broad market sentiment and US-China trade updates will continue to play a pivotal role in the Gold price action going forward.

Gold price technical analysis: Daily chart

The daily chart shows that the 14-day Relative Strength Index (RSI) is inching further into the extreme overbought zone, currently near 84, suggesting that a pullback remains in the offing.

Meanwhile, Gold buyers are once again challenging the upper boundary of the month-long rising channel, now at $4,184.

Buyers must find acceptance above the topside hurdle of the channel on a daily candlestick basis to resume the record-setting rally beyond the $4,200 round level.

The $4,250 psychological level will be next on tap for Gold optimists.

On the contrary, sellers could fall back toward the $4,100 round level in case Gold faces rejection at the above-mentioned channel resistance.

The next crucial support is seen at the lower boundary of the rising channel at $4,036.

A sustained move below the channel support would confirm a pattern breakdown, fuelling further correction toward the $3,950 psychological mark.

XAU/USD Current price: $4,143.38

• Federal Reserve Chair Jerome Powell delivered some dovish remarks, weighing on the US Dollar.
• The United States government shutdown and China-US trade tensions undermine the mood.
• XAU/USD met intraday buyers around $4,090, gears up for higher highs.

Spot Gold reached $4,179.76 a troy ounce on Tuesday, a fresh record high. The XAU/USD pair currently hovers in the 4,140 region, holding on to solid intraday gains amid risk aversion taking over financial boards. Concerns revolve around the United States (US), as on the one hand, the federal government remains shut down amid the lack of funding. On the other hand, fresh trade tensions between the US and China seem to have been interrupted, and threats of reciprocal levies resumed.

The US Dollar (USD) was able to advance throughout the first half of the day, but not versus the bright metal. It changed course after Wall Street’s opening, as US indexes trade in positive territory, shrugging off concerns and limiting Gold’s gains.

Meanwhile, Federal Reserve (Fed) Chairman Jerome Powell spoke about the economic outlook and monetary policy at the National Association for Business Economics (NABE) conference in Philadelphia, adding to the USD weakness in the American session.

Among other things, Powell noted that right now there is no risk-free path for monetary policy and that decisions will be driven by data and risk assessments. Additionally, he said that there is a risk that the slow pass-through of tariffs starts to look like persistent inflation, and that the labour market has demonstrated significant downside risk.

XAU/USD short-term technical outlook

The XAU/USD pair is extremely overbought in the daily chart, but still bullish. Technical indicators maintain their strong upward slopes within overbought levels, without signs of exhaustion. At the same time, the pair advances far beyond bullish moving averages, which reflect the ongoing persistent demand. The 20 Simple Moving Average (SMA) currently stands at $3,863.90.

In the near term, and according to the 4-hour chart, XAU/USD has scope to extend its advance. The pair met intraday buyers in the $4,090 area, while developing above all bullish moving averages. At the same time, the Momentum indicator resumed its advance after correcting extreme readings, while the Relative Strength Index (RSI) indicator currently consolidates around 66, also supporting the bullish case.

Support levels: 4,123.20 4,090.00 4,078.10

Resistance levels: 4,155.30 4,180.00 4,200.00