• 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

XAU/USD Current price: $2,675.01

• Sentiment led the way on Wednesday amid scarce macroeconomic data.
• Focus shifts to the European Central Bank monetary policy decision on Thursday.
• XAU/USD aims to reach fresh record highs and challenge the $2,700 mark.

Risk aversion keeps fueling Gold demand, with the bright metal flirting with record highs on Wednesday. XAU/USD peaked at $2,685.25 on Wednesday despite broad US Dollar (USD) strength against other major currencies. The latter has gained extra strength after Wall Street’s opening, resulting in XAU/USD pulling back from the mentioned high yet still holding to modest intraday gains.

A dismal market mood prevailed throughout the first half of the day, with Asian and European indexes edging lower, following softer-than-anticipated earning reports in the Old Continent. Wall Street, however, managed to revert the sentiment, as the three major indexes stand in the green.

Speculative interest keeps looking at Middle East developments and China for guidance, given the absence of first-tier macroeconomic figures this week, yet headlines are also scarce on those fronts. On the one hand, the missile barrage between Israel and Iran continues, with fears the attacks will reach nuclear or oil plants. On the other hand, the Chinese government has bluffed about stimulus measures to revive the economy but failed to provide enough details on the matter.

If something, the European Central Bank (ECB) may trigger some action on Thursday, as the central bank will announce its decision on monetary policy. The ECB is widely anticipated to deliver a third consecutive interest rate cut. The Main Refinancing Operations Rate and the Rate on Deposit Facility are foreseen down by 25 basis points (bps) each amid struggling economic progress.

XAU/USD short-term technical outlook  

From a technical point of view, the XAU/USD pair is poised to extend its advance and challenge the $2,700 mark. In the daily chart, the pair is up for a second consecutive day, with a bullish 20 Simple Moving Average (SMA) providing dynamic support at around $2,644.10. In the same chart, the longer moving averages also maintain their bullish slopes far below the shorter one, reflecting the long-term positive stance. Finally, the Momentum indicator turned flat around its 100 line, while the Relative Strength Index (RSI) indicator keeps grinding higher, currently at around 64, in line with bulls’ dominance.

In the near term, and according to the 4-hour chart, the risk skews to the upside. A bullish 20 SMA runs above its 100 SMA, while the 200 SMA grinds higher below the shorter ones, usually understood as growing momentum. At the same time, technical indicators have resumed their advances within positive levels after a modest corrective decline.

Support levels: 2,668.80 2,655.65 2,644.10

Resistance levels: 2,685.45 2,700.00 2,715.00 

What is not known is how cold it gets and how much demand there will be in the short term. And that’s why this is such a volatile contract because it’s focused on the short term more than anything else. It’s also influenced by the futures markets, which is actually where natural gas is traded, not the CFD markets. So, you are currently trading the forward month, which is going to be focusing on colder weather than we have right now, which is why the price has elevated.

This lasts for a while, and then sometime in the middle of winter, they start pricing in spring, which means less demand and the market rolls over. Yet again, this is a cyclical trade, nothing more, nothing less. At this point in time, if we do pull back, there’s probably value to be had, but it’s not something you go all in on.

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

Created on October 16, 2024

• Currently, the price of gold is stabilizing around $2,667 per ounce at the time of writing, as global geopolitical tensions continue to support it.
• As is well known, a stronger US dollar makes dollar-denominated commodities more expensive for holders of other currencies, affecting demand.

According to gold trading companies’ platforms, gold prices on the Comex exchange have been hovering around $2,600 per ounce during the past few sessions, with the upward movement pausing. 

Gold prices have been struggling to surpass their September peak, when prices rose to $2,696.90 per ounce. Recently, the US dollar has risen sharply over the past few sessions as investors expect the US Federal Reserve to not cut interest rates by a larger amount like its previous meeting. In the United States, rising inflation and a resilient Labor market have reduced bets on further cuts in interest rates by the Federal Reserve. 

Now, investors expect the Fed to cut US interest rates by 25 basis points at its November meeting. In September, the US central bank cut rates by 50 basis points, surprising financial and commodity markets. The US dollar extended its gains the previous week, hitting its highest level in more than two months, after Federal Reserve Governor Christopher Waller urged “more caution” about future rate cuts, citing recent economic data. Waller added: “Whatever happens in the near term, my baseline continues to call for gradual rate cuts over the next year.” 

Also, gold bulls are facing some pressure from easing tensions in the Middle East as the world awaits Israel’s response to Iran after the latter attacked Tel Aviv on October 1st. As a result, gold prices are likely to face some headwinds after the Washington Post reported that Israeli Prime Minister Benjamin Netanyahu told the United States that Israel would target the Iranian military, not nuclear or oil facilities. Furthermore, the report indicates that there will be a more limited counterstrike aimed at preventing a wider war. However, there has been no escalation so far since Iran launched ballistic missiles towards Israel on October 1st. Ultimately, this has somewhat eased tensions in the region. 

According to gold analysts today, gold prices enjoy support above the 21-day simple moving average (SMA) at $2,635 per ounce for the rest of this week. The 14-day Relative Strength Index (RSI) is flat, indicating that any decline in prices may be a good buying opportunity for traders. 

If gold prices rebound from their current slumber, the next target could be around $2,700 per ounce. Conversely, immediate support is seen at the 21-day simple moving average at $2,632, which will test the three-week low near the $2600 threshold below. Overall, a sustained break below the latter could extend to the downside towards the September 20 low of $2585 per ounce. 

Ready to trade today’s Gold Analysis? Here are the best brokers for Gold Trading to choose from.

• Gold price challenges key $2,670 resistance as the recovery extends into early Wednesday.    
• The US Dollar struggles with Treasury bond yields amid broad risk-aversion due to China’s woes.
• Gold price’s daily technical setup suggests a retest of record highs on a sustained recovery.

Gold price is building on the previous recovery early Wednesday, challenging the static resistance level at $2,670. Gold buyers stay optimistic amid a bullish technical setup on the daily time frame and broad risk aversion.

Gold price shines as China-led risk aversion intensifies

Skepticism surrounding the Chinese fiscal stimulus grows, as investors remain expectant of details on the plans announced by China’s Finance Minister last Saturday. This coupled with a sharp slowdown in China’s exports amplifies the economic concerns, intensifying risk-off flows across the financial markets in Asia so far this Wednesday.

Risk aversion extended into Asia, following a steep sell-off in the European and Wall Street stocks after disappointing earnings from Europe’s biggest tech firm ASML dragged chip stocks around the world.

Additionally, investors remain wary, as the US Federal Reserve (Fed) is expected to adopt a modest interest-rate cut path.

Recent Fed commentary continues to suggest that a 25 basis points (bps) rate cut is likely to be the outcome in November. Atlanta Fed President Raphael Bostic said late Tuesday that “my dot was 25 basis points more in 2024 beyond the September 50 basis point cut.”

San Francisco Fed President Mary Daly noted on Tuesday that “if inflation wanes along the lines central bankers expect, I think one or two [rate cuts] this year would be a reasonable thing” for the central bank to implement.”

However, less dovish Fed commentary fails to threaten the Gold price recovery, as investors run for cover in the traditional safe haven on growing uncertainty from China. Further, the US Dollar (USD) struggles to sustain its ongoing uptrend amid recent declines in the US Treasury bond yields, helping Gold price attempt another run toward the record high of $2,686.

All eyes now turn to Thursday when China will hold a press conference to discuss promoting the “steady and healthy” development of the property sector. Also, the US Retail Sales report will go hog the limelight on Thursday, in the absence of high-impact economic data releases from the US in the first half of this week.

In the meantime, China worries will likely dominate risk trends, which could continue to impact the value of the US Dollar, eventually influencing the USD-sensitive Gold price. The bright metal could also take cues from the ongoing geopolitical escalation between Israel and Iran. Israeli Prime Minister Benjamin Netanyahu told French President Emmanuel Macron that he would not agree to a ceasefire deal that failed to stop Hezbollah from rearming and regrouping.

Gold price technical analysis: Daily chart

Gold price extends the upswing above the key 21-day Simple Moving Average (SMA) support, now at $2,640, as buyers regain control.

The 14-day Relative Strength Index (RSI), points north above the midline, suggesting that more gains remain in the offing.

Gold price needs acceptance above the key $2,670 resistance on a daily candlestick closing basis to take on the record high at $2,686.

Further up, the $2,700 round level will be tested.

On the flip side, the immediate support is seen at the 21-day SMA at $2,640, below which the three-week lows near the $2,600 threshold will be tested.

A sustained break below the latter could extend the downside toward the September 20 low of $2,585.

Support at 50% Retracement

Today’s low almost reached the prior trend high from September 17. That high was 2.44, close to the 50% retracement level at 2.45. Given the intraday bullish reaction, today’s low could hold and lead to a continuation of the bounce and therefore mark a possible completion of the retracement. If it does, the next sign of strength would be a rally above today’s high of 2.55.

Natural gas would then be heading up into resistance zone starting around the prior retracement low of 2.59. Further, the 20-Day MA, now at 2.68, also marks a potential key resistance area and it has converged with the internal uptrend line. It also points to the prior trend high and beginning of a gap at 2.67.

Break of 20-Day MA, Points to 50-Day Line

Nonetheless, a breakdown of the near-term trend was indicated yesterday as natural gas fell below the uptrend line and further below the 20-Day MA. The 20-Day line was broken and confirmed with a daily close below the line on Friday. Since the 20-Day MA was broken it opens the door to the possibility of reaching the 50-Day MA. The 50-Day line is now at 2.38.

It sits between two retracement levels. The first price level was reached today at the 50% retracement, and the next potential lower target would be the 61.8% Fibonacci retracement at 2.31. A little below the 2.31 level is the 200-Day MA at 2.52 currently.

Symmetrical Triangle Progresses

Given the natural gas continues to trade inside a consolidation pattern in the form of a large symmetrical triangle the chance for further downside and choppy moves seems possible. The top side of the pattern was hit early this month leading to the current retracement. Therefore, a swing to the other side of the pattern, the bottom, remains a possibility.

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

XAU/USD Current price: $2,659.07

• The poor performance of global stocks underpins demand for the bright metal.
• Federal Reserve officials maintain a mostly neutral tone before the November meeting.
• XAU/USD has room to extend gains, with bulls looking for fresh record highs.

Gold price is marginally higher on Tuesday, pressuring the weekly high and trading not far from the record posted in September at $2,685.45 a troy ounce. The bright metal benefits from a risk-averse mood and easing US Dollar’s demand, albeit the latter is far from turning bearish.

As the United States (US) macroeconomic calendar remained scarce, speculative interest took clues from equities. Wall Street hit record highs on Monday, but the positive momentum faded in Asia, as falling oil prices undermined the energy sector, while tech shares were also on the back foot. Chinese stocks were also pressured amid disappointing local data and concerns about the economic health of the Asian giant.

As a result, European indexes closed in the red, while US ones are also down. Meanwhile, Crude Oil prices eased after Israeli Prime Minister Benjamin Netanyahu told the US that Israel would strike the Iranian military, not nuclear or oil targets, reducing the market’s concerns about the oil supply.

Multiple Federal Reserve (Fed) officials were on the wires but have provided no fresh clues about where the monetary policy is heading next. For the most, their speeches have been neutral, meaning neither dovish nor hawkish enough to hint at a change in the current view that the central bank will deliver 25 basis points (bps) interest rate cuts in the upcoming meetings.

XAU/USD short-term technical outlook  

The daily chart for XAU/USD shows buyers defended the downside at around a bullish 20 Simple Moving Average (SMA), currently at around $2,638. The 100 and 200 SMAs also head north far below the shorter one, in line with the bulls’ dominance. Finally, the Momentum indicator is hovering around its 100 line, while the Relative Strength Index (RSI) indicator turned modestly higher at around  62, also supportive of the bullish case.

The near-term picture shows a limited upward momentum, but the risk remains skewed to the upside. XAU/USD develops above a flat 100 SMA, while the 20 SMA is currently crossing above it, reflecting increased buying interest. Technical indicators, however, have lost their upward strength, holding anyways well above their midlines. Overall, chances are of fresh record highs, particularly if the $2,638.00 level holds.

Support levels: 2,654.90 2,638.00 2,625.40

Resistance levels: 2,673.10 2,685.45 2,700.00