• Gold edged lower this week but managed to stabilize above $2,600.
• The technical outlook suggests that sellers remain reluctant to bet on a deeper correction.
• Investors will keep a close eye on macroeconomic data releases from China next week.

Gold (XAU/USD) declined sharply in the first half of the week but regained its traction after coming within a touching distance of $2,600. Investors will scrutinize macroeconomic data releases from China next week, while keeping a close eye on geopolitical developments.

Gold stages limited correction

Gold edged lower at the beginning of the week and closed in the red on Monday as the positive impact of the previous Friday’s upbeat September employment data continued to be felt on the USD. Meanwhile, although geopolitical tensions remain high, they haven’t escalated any further with Israel taking its time in mulling its retaliatory response to Iran. In turn, the broad-based USD strength caused XAU/USD to stay on the back foot.

The National Development & Reform Commission (NDRC), China’s state planner, said on Tuesday that the downward pressure on China’s economy is increasing, adding “China’s economy is facing more complex internal, external environments.” 

Growing concerns over an economic downturn in China, the world’s biggest consumer of Gold, caused the precious metal to continue to stretch lower. Reflecting this sentiment, China’s Shanghai Composite Index fell nearly 7%, and Hong Kong’s Hang Seng Index lost over 1% on Wednesday.

The hawkish tone in the minutes of the Federal Reserve’s (Fed) September policy meeting helped the US Dollar (USD) outperform its rivals late Wednesday, not allowing XAU/USD to stage a rebound. The publication showed that even though a substantial majority of Fed officials supported the 50-basis-point (bps) rate cut, there was even a broader consensus that this initial step would not lock the Fed into any specific pace for future rate cuts. Additionally, some participants favored only a 25 bps reduction in the policy rate cut, while “a few others” mentioned they could have supported that decision as well.

The US Bureau of Labor Statistics reported on Thursday that annual inflation in the US, as measured by the change in the Consumer Price Index (CPI), softened to 2.4% in September from 2.5% in August. The core CPI, which excludes volatile food and energy prices, rose 3.3% on a yearly basis, surpassing the market expectation of 3.2%. Finally, the CPI and the core CPI increased 0.2% and 0.3%, respectively, on a monthly basis. Other data from the US showed that the number of first-time applications for unemployment benefits climbed to 258,000 in the week ending October 5 from 225,000 in the previous week. The disappointing Initial Jobless Claims reading didn’t allow the USD to benefit from the inflation report and helped XAU/USD find its footing.

In the absence of fundamental drivers, Gold continued to stretch higher on Friday but struggled to gather bullish momentum. The final data of the week from the US showed that the Producer Price Index (PPI) rose 1.8% on a yearly basis in September, arriving above the market forecast of 1.6%.

Gold investors await key data releases from China

The US economic calendar will not feature any high-tier data releases in the first half of the week. On Thursday, the US Census Bureau will release Retail Sales data for September. The market reaction to this data could be straightforward, with a positive surprise supporting the USD and a negative reading having the opposite impact on the currency’s valuation. Nevertheless, this data by itself is unlikely to have a strong enough effect to alter Gold’s direction.

Meanwhile, market participants will pay close attention to macroeconomic data releases from China. In the Asian session on Monday, Trade Balance figures could set Gold’s tone at the beginning of the week. A sharp decline in the trade surplus could feed into concerns over China’s economic health and weigh on Gold. Early Friday, the third-quarter Gross Domestic Product (GDP), which is forecast to show an annualized growth of 4.6%, alongside the Industrial Production and Retail Sales data for September, will be scrutinized by investors. On a yearly basis, Industrial Production and Retail Sales are anticipated to rise by 4.6% and 2.4%, respectively. Again, disappointing data releases are likely to hurt Gold, while positive surprises could be supportive for the yellow metal.  

Investors will continue to assess geopolitical developments next week as well. If Israel carries on with a retaliatory attack against Iran, a deepening crisis in the Middle East could help Gold benefit from safe-haven demand.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart rose toward 60 after falling to the neutral 50 area earlier in the week, suggesting that Gold’s bullish bias remains intact following a technical correction. 

On the upside, the midpoint of the ascending regression channel coming from June aligns as immediate resistance at $2,660 before $2,675 (static level) and $2,700-$2,710 (round level, upper limit of the ascending channel).

In case XAU/USD drops below $2,600-$2,590 (lower limit of the ascending channel, Fibonacci 23.6% retracement of the June-September uptrend) and starts using this level as resistance, technical sellers could take action. In this scenario, $2,545-$2,535 (50-day Simple Moving Average, Fibonacci 38.2% retracement) could be seen as the next bearish target.

• Silver price rises to near $31.50 after the release of the US PPI data for September.
• The annual headline and core PPI grew faster than expected.
• The Fed is expected to cut interest rates again in November.

Silver price (XAG/USD) climbs to near $31.50 in Friday’s New York session. The white metal gains while the US Dollar (USD) remains steady after the release of the United States (US) Producer Price Index (PPI) data for September.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles around 103.00.

The PPI report showed that the annual headline producer inflation grew by 1.8%, faster than estimates of 1.6%. However, it remained slower than 1.9% in August, upwardly revised from 1.7%. The annual core PPI – which excludes volatile food and energy prices – accelerated at a faster-than-expected pace to 2.8% from expectations of 2.7% and the former release of 2.6%, upwardly revised from 2.4%.

Meanwhile, the month-on-month headline producer inflation remained flat, strengthening the case for further interest rate cuts by the Federal Reserve (Fed). According to the CME FedWatch tool, 30-day Federal Fund Futures pricing data shows that the central bank will cut its borrowing rates by 25 basis points (bps) to 4.50%-4.75% in November.

The Fed started the policy-easing cycle with a 50-bps interest rate cut in September as Fed officials were concerned over growing job market risks, with confidence that price pressures will sustainably return to the bank’s target of 2%.

Silver technical analysis

Silver price strengthens after breaking above the horizontal resistance plotted from the September 30 low of $31.30, which is expected to act as support ahead. The near-term outlook of the Silver price has become upbeat as it has climbed above the 20-period Exponential Moving Average (EMA), which trades around $31.50. The asset is expected to extend its upside toward an October high of around $33.00.

The 14-period Relative Strength Index (RSI) climbs to near 60.00. A bullish momentum would trigger if the RSI breaks above 60.00.

Silver four-hour chart

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Copper is one of the most versatile and essential metals in today’s world. With applications ranging from electrical wiring to renewable energy infrastructure, its demand remains robust. But what does the future hold for copper prices?

We will draw on insights from our in-house experts (Boris Mikanikrezai and Andrew Cole) when exploring the current global picture. We will provide a copper price forecast for 2024 and a long-term outlook for 2025.

Global copper market outlook

As we navigate through 2024, the copper market presents a complex global picture, influenced by varying economic climates in major regions such as the US, China and Europe.

In the United States, the price of copper remains stable yet subdued, largely due to the seasonal summer lull, with premiums holding steady in the Midwest. Despite challenges, long-term optimism prevails, buoyed by potential supply imbalances and increasing demand for copper in green energy projects.

China, a major player in the copper market, witnessed a mild recovery in its physical market during August 2024. The copper grade A cathode premium in Shanghai saw an uptick, reflecting improved market conditions. This recovery is driven by expectations for better import arbitrage conditions post-LME price decline, although challenges remain due to fluctuating prices.

In Europe, the copper market remains weak, particularly in Germany – Europe’s largest consumer. Despite some demand from green energy projects, overall market conditions are bearish, with ample stock levels and sluggish performance in the manufacturing, automotive and construction sectors.

For more information on our long-term price analysis of the global copper market, see Fastmarkets’ copper 10-year long-term forecast.

Short-term copper price forecast for the remainder of 2024

In Q4 2024, copper prices are expected to experience upward pressure, driven by a more favorable macroeconomic sentiment (Federal Reserve rate cuts, stimulus in China), tighter market fundamentals (on expectations for smelter production cuts, a recovery in physical demand in China), positive seasonality (the fourth quarter typically being the strongest) and speculative positioning (rapid rebuilding of long positions). Given these factors, Fastmarkets analysts view the risk-reward profile skewed to the upside for the fourth quarter.

In China, the Shanghai premium should continue its recovery in the final quarter of the year, largely due to the improved sentiment following the substantial stimulus measures implemented by the country’s authorities.

In the US, spot market activity is projected to remain stable until the year-end, although supply availability could become a little tighter. Meanwhile, Europe might also see quiet spot activity until the remainder of the year, as most consumers are adequately covered by long-term contracts.

Improved macroeconomic conditions

China’s stimulus package, announced in September, represents a significant injection of liquidity totaling 3.95 trillion yuan ($560 billion), equivalent to over 3% of China’s GDP. The size of this package is substantial, nearing the level of support provided during the Covid-19 crisis. Alongside the Federal Reserve’s recent rate cuts, this should increase liquidity in the financial system in the coming months. Speculators have already begun to re-engage on the long side of the copper market in response. Given that the fourth quarter is historically the strongest for copper, we expect prices to average around $10,265 per tonne in Q4 2024, which would mark a record high.

Short-term challenges

Lower trading volumes and potential market volatility suggest caution. Despite the expected rise, the market remains sensitive to macroeconomic conditions and geopolitical events. Investors should keep an eye on these factors as they could impact short-term price movements.

The video below shows the relationship between global refined copper supply and demand, from 2022 through 2025.

Long-term copper price forecast for 2025 and beyond

Beyond the immediate future, the copper market and the price of copper is poised for a bullish long-term trajectory, driven by the energy transition’s escalating demand. For instance, by 2025 the copper grade A cathode premium in Rotterdam is projected to rise by approximately 25%, reflecting tighter regional fundamentals and a recovering European market.

Fastmarkets’ copper long-term outlook remains optimistic. As we move toward 2034, refined copper consumption is set to be driven significantly by sectors linked to the energy transition, including electric vehicles and renewable energy applications. The anticipated structural supply deficit will likely necessitate increased investments in production facilities, further underpinning a bullish outlook for copper prices.

Key drivers of copper demand and projected growth rates

As mentioned, refined copper consumption will be supported by demand from sectors linked to the energy transition. Some of its uses are listed below:

∙ To help connect batteries to electric vehicle (EV) powertrains
∙ For use in electric motors in the EV charging infrastructure
∙ Solar energy and wind power applications
∙ Grid connections

We expect total apparent demand for copper to rise at a compound annual growth rate (CAGR) of 2.6% in the decade to 2034. Copper consumption from energy transition sectors should grow at a CAGR of 10.7%, including 14.3% for the EV sector, 5.6% for the solar power industry and 9.3% in wind power applications. Traditional non-energy transition sectors should see a growth rate of 1.4%.

Regional copper price projections for 2025

The US copper market is expected to see a modest increase in demand, driven by government infrastructure projects and a growing emphasis on renewable energy. The supply-demand balance is likely to tighten, supporting higher copper prices.

China remains a critical player in the global copper market. The country’s focus on green energy and electric vehicles will drive significant demand. We project the Shanghai premium will average approximately $27 per tonne in 2025, reflecting a 25% decline from the estimated 2024 average. However, the long-term outlook remains positive, with expected stabilization and growth.

Key takeaways regarding copper price forecasts

The forecast for copper prices in the next 12 months is bullish. However, there are key risks to monitor, including a potential US economic recession and increased trade protectionism. The long-term forecast is also very constructive, driven by robust demand from the energy transition sectors and constrained supply dynamics.

Economists, analysts and investors should keep an eye on macroeconomic conditions, geopolitical events and industry-specific developments that could impact copper prices.

For more detailed insights and a comprehensive analysis, consider exploring Fastmarkets’ copper 10-year long-term forecast.

• Silver oscillates in a range on the last trading day of the week. 
• A mixed technical setup warrants caution for aggressive traders.
• Acceptance above $32.00 will set the stage for additional gains.

Silver (XAG/USD) struggles to capitalize on its modest intraday uptick and trades around the $31.15 region during the first half of the European session on Friday, nearly unchanged for the day.

Looking at the broader picture, this week’s bounce from the vicinity of the $30.00 psychological mark and a subsequent strength back above the $31.00 mark favors bullish traders. That said, the recent repeated failures to capitalize on momentum beyond the $32.00 mark constitute the formation of a bearish multiple-tops pattern. This, along with mixed oscillators on the daily chart, warrants caution before positioning for any meaningful appreciating move for the XAG/USD. 

From current levels, the $31.55 region is likely to act as an immediate hurdle ahead of the $31.75-$31.80 area and the $32.00 mark. This is followed by resistance near the 32.25 supply zone, which if cleared decisively has the potential to lift the XAG/USD back towards the multi-year peak, just ahead of the $33.00 round figure touched last Friday. Some follow-through buying should pave the way for a move towards the December 2012 swing high, around the $33.85 region. 

On the flip side, weakness below the $31.00 round figure now seems to find some support near the $30.70-$30.65 region ahead of the $30.35-$30.25 area and the $30.00 mark. The next relevant support is pegged near the $29.80-$29.70 confluence – comprising the 100-day Simple Moving Average (SMA) and the 50-day SMA. This should act as a key pivotal point, which if broken will set the stage for an extension of the recent decline from the highest level since December 2012. 

The XAG/USD might then accelerate the downfall towards the $29.00 mark before eventually dropping to test the $28.60-$28.50 zone. The descending trend could extend further towards the $28.10-$28.00 region en route to the September monthly swing low, around the $27.70 area.

Silver daily chart

• Gold price looks to extend the bounce from three-week lows ahead of US PPI data.    
• The US Dollar gives back US CPI-led uptick amid employment concerns, hawkish Fedspeak ignored.
• Gold price finds footing again above 21-day SMA at $2,627, more recovery likely?

Gold price is looking to build on the previous recovery from three-week lows of $2,604 early Friday. Broad risk aversion and a modest US Dollar (USD) downtick support Gold price heading into the US Producer Price Index (CPI) data release due later on Friday.

US jobs worries outweigh hot inflation, lifting Gold price

Gold price continues to cheer the unfazed odds of a 25 basis points (bps) interest rate cut by the US Federal Reserve (Fed)  in November. Markets currently price in about an 86% chance of such a move next month, according to the CME Group’s FedWatch Tool.

The health of the US labor market remains a concern for investors after Initial Jobless Claims surged by 33,000 last week to a seasonally adjusted 258,000 for the week ended October. 5. Discouraging US jobs data overshadowed the hot Consumer Price Index (CPI) inflation data for September, keeping the November rate cut hopes alive and kicking.

 US annual CPI inflation dropped from 2.5% in August to 2.4% in September, the lowest level since February 2021, although still came in above the estimated 2.3% print. The CPI increased by 0.2% over the month in September, matching August’s increase and surpassing 0.1% expectations. 

Therefore, the US Dollar failed to sustain its recovery momentum and pullback from two-month highs against its major rivals, as short-term two-year US Treasury bond yields tumbled. This helped Gold price stage a comeback from multi-week troughs.

The USD retracement was partly sponsored by the USD/JPY slide, fuelled by hawkish comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino, who said on Thursday that “if the outlook for economic activity and prices presented in the July report is achieved, the BoJ will accordingly raise interest rates.”

Late Thursday, slightly hawkish commentary from Atlanta Fed President Raphael Bostic was unable to lift the sentiment around the Greenback, leaving the buck on the back foot ahead of Friday’s US PPI inflation data.

Bostic said in a Wall Street Journal (WSJ) interview that he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the US central bank. He added that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.

The dovish sentiment around the Fed rate cut expectations could be tested on the US PPI report, significantly impacting the value of the US Dollar and Gold price. The US PPI is seen easing to 1.6% YoY in September while the annual core PPI inflation is set to rise to 2.7% in the same period, against a 2.4% growth reported previously.

Gold price could continue to draw support from increased optimism about China’s fiscal stimulus package due to be rolled out on Saturday. Meanwhile, speeches from several Fed policymakers will also keep Gold traders entertained.

Gold price technical analysis: Daily chart

Buyers refused to give up on Thursday and jumped back into the game even after Gold price closed Wednesday below the key 21-day Simple Moving Average (SMA) support, then at $2,619.

Gold price recaptured the 21-day SMA support-turned-resistance, now at $2,628, on a daily closing basis on Thursday, reviving the uptrend.

The 14-day Relative Strength Index (RSI) looks north above the 50 level, suggesting that there is scope for more upside.

The next bullish targets for Gold price are seen at the $2,650 psychological barrier and the intermittent highs near $2,670.

On the downside, the immeddate support is seen at the three-week lows near the $2,600 threshold. A sustained break below the latter could extend the downside toward the September 20 low of $2,585.

Further declines could challenge the $2,550 demand area, where the 50-day SMA aligns.

Marginally lower crude, gasoline prices expected in rest of 2024

Agency cuts 2025 crude price outlook by $6.50/b for WTI, Brent

Expects dip in global liquid fuels demand, higher US output in 2025

The US Energy Information Administration Oct. 8 lowered its 2024 crude price forecasts by nearly $2/b, and by $6.50/b for 2025, as concerns over global demand growth outweighed the short-term uncertainty of potentially disruptive escalation between Israel and Iran in the Middle East.

Concerns over global oil demand growth should cause oil prices to remain lower in 2024 and 2025 than previously forecast, the agency said in its October Short-Term Energy Outlook.

The EIA cut its 2024 forecast for Brent crude by $1.91 to $80.89/b. Citing a $6/b September drop in prices, the EIA also reduced its 2025 Brent outlook by $6.50 to $77.59/b. The agency forecast WTI crude down $1.89 from last month’s estimate for the year, while it lowered by $6.50 its expectation for 2025 to $73.13/b.

“Following the September drop in prices and our expectation that oil demand growth will be lower next year than we had previously forecast, we have lowered our forecast for crude oil prices despite increasing oil prices in early October,” the agency wrote in its outlook. “No oil supplies have been affected by increased military action in the Middle East at the time of STEO publication, and we do not assume any disruption in our forecast. However, the conflict has escalated in recent weeks with no timeline for a potential resolution, increasing the possibility for supply disruptions and price volatility. At the same time, we assess that significant surplus crude oil production capacity is available, which could be brought online in the event of a disruption.”

Inventories still falling

Thanks to OPEC+ production cuts, less oil is still being produced globally than consumed, and oil is being withdrawn from inventories, the EIA said, estimating global oil inventories fell by 800,000 b/d in the third quarter of 2024. It projected inventories to fall by 600,000 b/d in the first quarter of 2025, fueling its expectation of an increase in current Brent prices, albeit a smaller one than EIA forecast in September.

“By the middle of next year, we anticipate accelerated growth in oil production as OPEC+ increases its production and as production continues to grow in the United States, Guyana, Brazil and Canada,” EIA said.

In September, the EIA continued to lower its forecast of global consumption of liquid fuels, thanks in large part to ongoing reductions in China’s crude oil imports and refinery runs. The EIA cited recent monetary stimulus that could spur economic growth and greater crude demand in the country, but said it kept its China’s expected 2025 growth rate largely unchanged in October.

The agency nudged down its global oil demand outlook by 40,000 b/d for 2024 to 103.06 million b/d, and its 2025 estimate down 250,000 b/d, at 104.35 million b/d.

US gasoline expected to fall in 2025

The lower crude oil forecast pulled down expected US retail gasoline prices. While the EIA maintained its previous expectation of $3.33/gal in the rest of 2024, it saw gasoline prices declining to an average of $3.22/gal in 2025, down 7 cents from last month’s estimate.

The EIA also raised its expectations for 2025 retail diesel prices, putting the fuel at $3.55/gal next year, down 18 cents from the prior estimate. It expects diesel to remain steady in 2024, averaging $3.76/gal, down just 2 cents from its September estimate.

The EIA reduced its 2024 outlook for US oil production by 30,000 b/d to 13.22 million b/d, though it still expects output growth to continue into 2025 to put US crude production at 13.54 million b/d, a 130,000 b/d drop from last month’s estimate driven by a minor expected slowdown in US exploration and production activity, based on recent industry survey results.

This month, the agency also published its 2024 Winter Fuels Outlook, comprising its annual expectations for US residential energy consumption, prices and expenditures during the winter months, sources of which include natural gas, propane and heating oil alongside electricity. The EIA projected those costs to remain broadly level from last winter, with declining energy prices offsetting predictions of colder weather.

• Silver oscillates in a range and remains close to a multi-week low touched on Tuesday.
• The technical setup favors bearish traders and supports prospects for further losses. 
• Bears still need to wait for a sustained break below $30.00 before placing fresh bets.

Silver (XAG/USD) lacks any firm intraday direction on Thursday and oscillates in a narrow trading band around mid-$30.00s through the first half of the European session. The white metal remains within the striking distance of a nearly three-week low touched on Tuesday and seems vulnerable to prolonging its rejection slide from the $33.0 neighborhood, or the highest level since December 2012 set last week.

The recent repeated failures to capitalize on momentum beyond the $32.00 mark constitute the formation of a bearish multiple-tops on the daily chart. Moreover, oscillators on the daily chart have started gaining negative traction and add credence to the near-term bearish outlook for the XAG/USD. That said, it will still be prudent to wait for a sustained break and acceptance below the $30.00 psychological mark before positioning for any further depreciating move.

The subsequent downfall could drag the XAG/USD to the $29.75-$29.60 confluence support – comprising the 100-day Simple Moving Average (SMA) and the 50-day SMA. A convincing break below the latter should pave the way for a fall towards the $29.00 mark en route to the next relevant support near the $28.60-$28.50 zone. 

On the flip side, any attempted positive move now seems to confront resistance near the $31.00 horizontal support breakpoint. Some follow-through buying, however, might trigger a short-covering rally and allow the XAG/USD to reclaim the $32.00 mark, with some intermediate hurdle near the $31.55 area and the $31.75-$31.80 region. The momentum could extend further towards the $32.25 supply zone en route to the multi-year peak, just ahead of the $33.00 round figure.

Silver daily chart

• Silver price climbs to near $31.00 despite the US inflation remained hotter-than-expected in September.
• The core CPI accelerated to 3.3% from estimates and the August reading of 3.2%.
• Traders expect the Fed to reduce interest rates by 25 bps next month.

Silver price (XAG/USD) strengthens and jumps to near $31.00 in Thursday’s North American session. The white metal witnessed strong buying interest after the release of the United States (US) Consumer Price Index (CPI) data for September.

The CPI report showed that Inflationary pressures grew at a faster-than-expected pace due to a sharp increase in prices of apparel. Also, medical and transportation services became more expensive.

The annual headline inflation decelerated at a slower-than-projected pace to 2.4% from 2.5% in August as the impact of a sharp decline in the cost of energy was offset by a rise in food prices. Economists estimated the headline inflation to have grown by 2.3%. The core CPI – which strips off volatile food and energy prices – accelerated to 3.3% from the estimates and the former release of 3.2%. The monthly headline and core inflation grew faster than projected.

The white metal struggles for direction as market participants are taking time to digest inflationary figures and adjust expectations for the Federal Reserve (Fed) interest rate outlook for the remaining year. According to the CME FedWatch tool, a 25-basis points (bps) rate cut in November is highly expected.

Meanwhile, the US Dollar (USD) is also displaying volatile moves after the US inflation data release.  Going forward, investors will focus on the US Producer Price Index (PPI) data for September, which will be published on Friday.

Silver technical analysis

Silver price weakens after a breakdown of the Double Top formation on a four-hour timeframe. The above-mentioned pattern was activated after the asset broke below the horizontal support plotted from the September 30 low around $31.00, which acts as a resistance now. A bear cross, represented by the 20- and 50-period Exponential Moving Averages (EMAs) at $31.60, suggests weakness ahead.

The asset has temporarily found support near the 200 EMA, which trades around $30.50.

The 14-day Relative Strength Index (RSI) has delivered a range shift move, suggesting a bearish momentum.

Silver four-hour chart

XAU/USD Current price: $2,621.68

• United States employment figures revive concerns about the sector’s health.
• Wall Street opened mixed, with only the S&P500 trading in the green.
• XAU/USD’s near-term picture shows buyers continue to hesitate.

Gold price bounced sharply after nearing the $2,600 mark, now trading around the $2,620 level. The US Dollar saw a short-lived spike following the release of United States (US) data, which came opposite to the Federal Reserve (Fed) needs.

On the one hand, inflation in September was hotter than anticipated. The annual Consumer Price Index (CPI) rose by 2.4%, easing from the previous 2.5% but higher than the 2.3% expected. Core annual CPI  rose 3.3%, above the August reading and the market forecast of 3.2%. On a monthly basis, the CPI was up 0.2% against the 0.1% anticipated by market participants. On the other hand,  Initial Jobless Claims for the week ended October 4 rose to 258K, worse than the 230K expected.

After the dust settled, however, market participants understood the figures were hardly enough to affect future Federal Reserve’s (Fed) decisions. The US Dollar seesawed between gains and losses but seems to be slowly recovering its bullish poise. American stock markets, in the meantime, struggle for direction. Following the upbeat performance of Asian and European indexes, only the S&P500 posts gains.

Looking ahead, market participants will have to wait for US data scheduled for next week, as well as the European Central Bank (ECB) monetary policy announcement.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart for the XAU/USD pair shows it may soon resume its advance. After falling below a still bullish 20 Simple Moving Average (SMA), Gold aims to recover above it. In the meantime, the 100 and 200 SMAs maintain their bullish slopes far below the current level. Finally, the Momentum indicator hovers around its 100 line, partially losing its bearish strength, while the Relative Strength Index (RSI) indicator turned higher and currently stands at around 55.

The near-term picture is still bearish. XAU/USD is meeting sellers at around its 20 SMA, which extends its slide below a mildly bullish 100 SMA. Technical indicators, in the meantime, offer neutral-to-bearish slopes while developing below their midlines. At this point, a steeper decline below the $2,600 mark seems unlikely, but the odds for a firmer advance in the near term are still low.

Support levels: 2,603.90 2,589.10 2,575.20

Resistance levels: 2,625.40 2,637.10 2,652.90

The CME FedWatch Tool indicates that the likelihood of a 25 bps rate cut in November dropped to 75.9% from 85.2% a day earlier, signaling shifting market sentiment. Additionally, US Treasury yields continued to climb, with the 10-year Treasury note reaching 4.06%, up 5.5 bps. This, coupled with a stronger US Dollar Index (DXY) at 102.90, its highest level since mid-August, weighed heavily on gold prices.

Morning Cues
– S&P and Dow end at record highs
– CPI data awaited in the US tonight
– Asian markets higher, GIFT nifty indicating open in the green of around 125 pts
– DIIs Buy 3509cr, FIIs Sell 4,563cr in Cash
– TCS reports numbers today
– Crude and gold prices continue to fall

— Sonal Bhutra (@sonalbhutra) October 10, 2024

US CPI Report in Focus as Traders Eye Inflation Data

All eyes are now on the upcoming US Consumer Price Index (CPI) report, which is forecasted to show a decline from 2.5% to 2.3% year-over-year (YoY). Monthly CPI is expected to come in at 0.1%, down from 0.2%. If the data aligns with expectations, it could signal a continuation of the Fed’s dovish stance, potentially providing some relief for gold.

Core CPI is anticipated to remain unchanged at 3.2% YoY. Any deviation from these estimates could either strengthen or weaken the case for future rate cuts, impacting gold prices significantly. Additionally, Initial Jobless Claims data for the week ending October 5 is projected to show 230K new claims, slightly higher than the previous reading of 225K.

Technical Analysis: Key Levels to Watch

Gold is currently holding above a key support level at $2,605, supported by an upward trendline on the 4-hour chart. As long as the price remains above this trendline, a potential bullish reversal could be in play. Immediate resistance is seen at $2,624, with the next target at $2,636, coinciding with the 50-day Exponential Moving Average (EMA). Breaking above $2,636 could open the door to $2,652.

Gold held at $2,620, pressured by a strong US dollar and China’s vague stimulus plans. Investors await key CPI and PPI data for more clues. October 9th, 2024 pic.twitter.com/spKnecRCdl

— Russell Calkins (@RUSSELLCALKINS) October 9, 2024

However, if the $2,605 support is breached, gold may face increased selling pressure, pushing prices down to $2,594 and potentially $2,573. The Relative Strength Index (RSI) is currently at 40, indicating neutral sentiment but is approaching oversold territory, which could lead to a short-term rebound.

Key Insights:

• FOMC Impact: The Fed’s Minutes reveal divided opinions on rate cuts, adding pressure on gold.

• CPI Expectations: Upcoming US CPI data will be crucial in determining short-term direction.

• Technical Outlook: $2,605 serves as key support; a break below could trigger further downside.

Overall, the upcoming economic data and the Fed’s stance will play a critical role in shaping gold’s trajectory. Traders should closely monitor the $2,605 support level and $2,624 resistance for potential breakout signals.