• Gold price sits at record highs above $2,700, awaits Fedspeak for fresh impetus.
• The US Dollar consolidates weekly gains after riding on a likely Trump victory optimism.
• The daily RSI prods overbought territory but Gold buyers are not ready to give up yet.

Gold price is sitting at the highest level on record above $2,70o early Friday, with the latest uptick led by China’s stimulus optimism and a broad-based US Dollar (USD) pullback. The focus now shifts to the Middle East geopolitical updates and Fedspeak for further trading impetus.  

Gold price eyes Mideast tensions, Fedspeak

The USD retreats from over two-month highs against its six major rivals in Asian trades on Friday, as buyers take a breather after the recent rally back by the market’s optimism that Republican nominee Donald Trump is set to win the 2024 US presidential elections. Trump’s fiscal and trade policies are seen as inflationary and positive for the Greenback.

Besides, markets witness a positive shift in risk sentiment, as the mixed Chinese growth and activity data combined with the People’s Bank of China’s statement have rekindled stimulus hopes. The renewed market optimism also diminishes the Greenback’s appeal as a safe-haven currency.

Therefore, Gold price receives a double booster shot, first from a broad USD retracement and then from expectations of further interest-rate cuts from China. Chinese central bank Governor Pan Gongsheng said that “depending on market liquidity, reserve requirement ratio (RRR) could be further reduced by 0.25 to 0.5 percentage points before the end of the year.”

He noted that “the interest rate of 7-day reverse repo operation in the open market will be lowered by 0.2 percentage points,” adding, “It is expected that the loan market prime rate (LPR) could also fall by 0.2-0.25 percentage points.”

A period of low-interest-rate regime tends to benefit the non-interest-rate bearing Gold price.

That said, the European Central Bank (ECB) lowered key policy rates for the third time this year on Thursday but did not provide any forward guidance on the rates outlook. However, four sources close to the matter told Reuters a fourth cut in December is likely unless economic or inflation data turns around in the coming weeks.

Meanwhile, US Retail Sales rose 0.4% in September after an unrevised 0.1% gain in August, the Commerce Department’s Census Bureau said on Thursday. Strong US data indicated robust economic prospects but that failed to alter the odds of a 25 basis points (bps) rate cut by the US Federal Reserve (Fed) in November. Markets are currently pricing in a 93% probability of such a move by the Fed next month.

Additionally, Gold price found fresh haven demand amidst escalating geopolitical tensions between Iran and Israel. Iran-backed militant group, Hezbollah, said it will escalate war with Israel after Israel’s Foreign Minister confirmed the killing of Hamas leader Yahya Sinwar on Thursday.

Looking ahead, all eyes remain on the speeches from several Fed policymakers and the rife tensions in the Middle East for further upside in Gold price. The end-of-the-week flows could also play its part in driving the volatility around Gold price.

Gold price technical analysis: Daily chart

Gold price tested $2,700 on Thursday and conquered the latter early Friday, extending the upside break of the key resistance at $2,670.

The 14-day Relative Strength Index (RSI), battles the overbougtht region near 70, at the moment, suggesting that there remains some more room to the upside before a correction could set in.

If Gold buyers manage to defend the $2,700 round level, a test of the $2,750 psychological barrier will be inevitable.

On the downside, the immediate support is seen at the intraday low of $2,692, below which a drop toward the previous resistance now turned support at $2,670 cannot be ruled out.

Acceptance below that level will expose sellers to the key 21-day Simple Moving Average (SMA) support at $2,653.

• Silver price appreciates due to safe-haven flows amid rising geopolitical tensions in the Middle East.
• Risk aversion strengthens due to the killing of Yahya Sinwar, the militant leader of Hamas.
• Demand for the non-yielding Silver increases due to the prevailing likelihood of interest rate reductions by major central banks.

Silver price (XAG/USD) extends its winning streak for the fourth consecutive day, hovering around $32.00 per troy ounce during the Asian trading session on Friday. The price of the grey metal receives support from safe-haven flows amid rising tensions in the Middle East.

Israel’s military and the Shin Bet security service confirmed on Thursday that Yahya Sinwar, the Gaza Strip Chief of the Palestinian Islamist group Hamas, was killed by Israeli forces during an operation in southern Gaza on Wednesday. Sinwar’s death has raised concerns among the families of Israeli hostages taken to Gaza by Hamas, who fear that the killing of the militant leader might increase the risk to their loved ones, according to Reuters.

The non-yielding assets like Silver gains demand due to the prevailing sentiment of interest rate reductions by major central banks. US Federal Reserve (Fed) is expected to reduce interest rates by 50 basis points by the end of 2024. According to the CME FedWatch Tool, there is a 90.8% probability of a 25 basis point rate cut in November and a 74.0% chance of another cut in December.

On Thursday, the European Central Bank (ECB) lowered its Main Refinancing Operations Rate by 25 basis points to 3.4%. Recent inflation data also indicates that both the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ) may consider potential rate cuts next month.

Since the outbreak of the conflict in Gaza last October, spikes in oil prices have been short-lived as oil production has largely been undisrupted. However, this could change if Israeli strikes target Iranian energy infrastructure, including export terminals, oil and gas fields, power plants, and storage facilities.

“This option is unlikely to gain favor with the U.S. administration, which would be wary of disrupting oil markets in the weeks leading up to the presidential election,” Kaneva noted. “Still, until the conflict is resolved, we could see a sustained geopolitical premium in crude price.”

Another key difference is that global oil inventories are much lower today. Global crude inventories currently stand at 4.4 billion barrels — the lowest on record since January 2017 and markedly below last year’s levels, when Brent was trading at $92/bbl. Meanwhile, both OECD crude and liquids inventories sit below their five-year range and five-year averages, and oil stocks at Cushing are severely depleted by the standards of the last 15 years.

“Price is a function of demand for oil inventory, which in turn depends on the willingness of users to either deplete or restock their holdings. Given the anticipation of an oversupplied market in 2025, oil consumers have so far opted to wait, causing a dislocation of the oil price from its fair value,” Kaneva explained. “However, shifting dynamics in the Middle East might create a greater urgency to replenish inventories, thereby realigning the price of oil with its fundamental level.”

Return to Double Bottom Breakout Signal

A bullish breakout of a double bottom pattern triggered in September with a rally above 2.30, and it was eventually followed by an accelerated advance to the recent swing high of 3.02. That was in an area of potential resistance around the top boundary line of a large symmetrical triangle pattern. Once the top of the pattern rejects price to the downside there is the potential to eventually reach the other side, in this case the bottom boundary line that connects with the second bottom from August 27. Notice that the line is redrawn from the original lower boundary line to account for the higher swing low in August.

200-Day MA at 2.25 is Key

Now, natural gas is in the process of revisiting the neckline of the double bottom to test it as support. However, given the bearish momentum of the descent, down by at least 22.4% from the 3.02 high in nine days, it may give way to a subsequent test of support around the 200-Day MA, now at 2.25. If a test of the 200-Day line fails to find buyers, there is the potential for a drop to test support around the 78.6% retracement at 2.12. And that also opens the door to a potential test of the lower line of the triangle.

Decline is Getting Extended

The expectation is for support to be seen at or above the 200-Day MA. Other than an initial minor test of support at the 200-Day line on September 19, this is the first real test since a bull breakout of the line triggered on September 11. It should hold and lead to an eventual bullish reversal if natural gas is to have a chance to again strengthen and eventually attempt another bullish breakout of the triangle pattern.

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

• Silver rises third day; capped below $32.00 amid high US Treasury yields.
• Momentum suggests more gains; resistance eyed at $32.17, May high at $32.51.
• Support at $31.37; break below could lead to retests of $30.76, October low $30.12.

Silver’s price extended its gains to three straight days yet remains below the $32.00 figure as US Treasury yields cap the grey metal’s advance. This, along with a buoyant US Dollar, didn’t deter the precious metal from advancing higher, and it consolidated at around the higher bound of the $31.50/$31.90 range. The XAG/USD trades at $31.90, above its opening price by 0.80%.

XAG/USD Price Forecast: Technical outlook

After plunging almost vertically from a year-to-date (YTD) peak of $32.95 to $30.12 within three days, the non-yielding metal is now recovering, with buyers targeting a potential test of the $33.00 level.

Silver’s recovery from plunging almost vertically from a year-to-date (YTD) peak of $32.95 to $30.12 within three days continued on Thursday. Momentum hints at buyers gathering steam, as depicted by the Relative Strength Index (RSI). Hence, the XAG/USD path of least resistance is tilted to the upside.

That said, the first resistance would be the $32.00 figure, followed by the October 16 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 $31.37, Silver could drop to the weekly low of $30.76. If surpassed, this would clear the path to challenge October’s 8 low of $30.12.

XAG/USD Price Action – Daily Chart

XAU/USD Current price: $2,691.29

• The European Central Bank trimmed interest rates by 25 basis points each.
• The US reported upbeat employment-related figures, Retail Sales.
• XAU/USD keeps reaching higher highs, bulls are not yet done.

Gold price reached a fresh all-time high on Thursday, trading as high as $2,969.63 a troy ounce during American trading hours. Gold buyers gained confidence early in Asia as the poor performance of local shares fueled demand for safety. Demand for the bright metal was also backed by concerns about the United States (US) future government. Three weeks ahead of the election, polls show a tight vote intention between the two candidates, generating uncertainty.

XAU/USD suffered a minor intraday setback after the European Central Bank (ECB) announced its decision on monetary policy. The ECB trimmed the three main benchmarks by 25 basis points (bps) each as widely anticipated. In the following press conference, President Christine Lagarde delivered a pretty dovish message, putting pressure on the Euro and pushing the Greenback temporarily up.

The US Dollar further advanced after local data beat expectations. September Retail Sales rose by 0.4% in the month, while the Philadelphia Fed Manufacturing Survey jumped to 10.3 in October from 1.7 in September. Finally, Initial Jobless Claims for the week ended October 11 rose by 241K, below the 260K anticipated. As a result, Wall Street surged, while Treasury bonds fell amid expectations the Federal Reserve (Fed) would be able to doge an economic setback.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart for XAU/USD suggests the bullish run is far from over. The pair keeps slowly but steadily grinding north, while a bullish 20 Simple Moving Average (SMA) leads the way north by providing support at around $2,649.50. At the same time, the 100 and 200 SMAs advance far below the shorter one, reflecting persistent buying interest. Finally, technical indicators gain upward strength within positive levels, in line with another leg north.

In the near term, and according to the 4-hour chart, the risk also skews to the upside. A bullish 20 SMA extends its upward slope above the 100 SMA, while the 200 SMA grinds north far below the shorter ones. Technical indicators, in the meantime, hold well above their midlines, although without clear directional strength. The $2,700 mark is at reach in the upcoming sessions, with a corrective decline afterwards possible. Still, there are no signs buyers are giving up; instead, they would likely take their chances on dips.

Support levels: 2,685.45 2,668.80 2,655.65  

Resistance levels: 2,700.00 2,715.00, 2,740.00

• Silver price trades sideways below $32.00 as investors seek fresh cues about the Fed’s likely monetary policy action in November and December.
• The US Dollar strengthens after better-than-expected US Retail Sales growth and lower jobless claims.
• Rising US Trump’s odds of winning presidential elections improve the Silver price’s appeal as a safe haven.

Silver price (XAG/USD) trades in a tight range below the key resistance of $32.00 in Thursday’s North American session. The white metal consolidates as investors look for fresh cues about the Federal Reserve’s (Fed) likely interest rate action in the remaining year.

According to the CME FedWatch tool, 30-day Federal Funds futures pricing data shows that the central bank will cut interest rates by 25 basis points (bps) in both policy meetings in November and December.

Meanwhile, upbeat United States (US) monthly Retail Sales and lower Initial Jobless Claims for the week ending October 11 have strengthened the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh 10-month high at 103.85.

The Retail Sales data, a key measure of consumer spending, rose by 0.4%, faster than estimates of 0.3% and the former release of 0.1%. Meanwhile, individuals claiming jobless benefits for the first time came in lower at 241K than estimates of 260K.

10-year US Treasury yields soar to 4.08%. Historically, higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver. However, the Silver price remains supported as growing speculation for former President US Donald Trump winning upcoming presidential elections has improved its appeal as safe-haven.

Silver technical analysis

Silver price strives to reclaim the decade-high of $33.00. Upward-sloping 20- and 50- Exponential Moving Averages (EMAs) near $31.20 and $30.45, respectively, suggest a strong uptrend.

The 14-day Relative Strength Index (RSI) approaches 60.00. A decisive break above the same would activate a bullish momentum.

Silver daily chart

Created on October 17, 2024

• During my daily analysis of commodities, the silver market stood out due to the fact that we shot higher, but then gave back some of the gains.
• At the beginning of the trading session, it looked as if the precious metals markets were going to go screaming higher as traders started to freak out at the open, especially in New York.
• That being said, things have calmed down a bit, and now we have given back about half of the gains as of the middle of the afternoon session in New York.

At this point in time, the market looks as if it continues to go back and forth between the $30 level in the bottom, and the $32.50 level above. We are a little closer to the top, and I think at this point in time I think that short-term pullbacks offer buying opportunities. Furthermore, we also have the 50 Day EMA, underneath is an area that a lot of people would be looking to. After all, it is a technical indicator that a lot of people watch, and therefore it makes a certain amount of sense.

Silver is not Gold

Keep in mind that silver is not gold. Yes, I recognize that both are considered to be precious metals, but silver does behave a little bit differently than gold. After all, the silver market is highly tied to a lot of the “green technologies” that a lot of people are so excited about, so keep in mind that when you start to see things in that sector attract more attention, it suggests that perhaps there will be more demand for silver. Furthermore, you also have the interest rates around the world dropping so that could end up being a driver of silver being positive as well. After that, we also have geopolitical concerns, which like gold, some people will put money toward silver.

That being said, silver is not gold. What I mean by this is that it does have a few other aspects that move the market, and of course it’s a much more volatile and dangerous contract. The contract size is larger from a nominal value position, so therefore it’s likely that the average trader needs to be very careful with their position size, because it can be so dangerous to your account. I prefer buying dips, as long as we can stay above the $30 level, but I also recognize that things will be very noisy.

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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.