Chapter 41 10/19 XAUUSD: Bullish Momentum Remains Unabated, Overall Environment Continues to Favor Safe-Haven G
Summary: Gold prices continued to hold near their highest levels in nearly a month on Thursday, indicating that the consolidation or pause over the past two days has not posed a downside threat to gold prices, which are expected to continue to rise.
Fundamentals
After hitting a near one-month high, gold prices briefly consolidated and faced nominal selling as investors turned their attention to Fed Chairman Powell's speech later at the Economic Club of New York, which may provide clues about interest rate prospects.
However, the overall environment remains favorable for safe-haven gold. Since the outbreak of the Israeli–Palestinian conflict, gold has risen by about $100 and is showing signs of further increase as the situation worsens. A recent deadly explosion in a Gaza hospital resulting in hundreds of deaths has intensified an already heated situation, threatening further escalation of the conflict, which continues to drive traders to seek safety.
Nevertheless, as the market anticipates the Fed to maintain relatively high interest rates for a longer period, rising US bond yields have limited the gains in non-yielding gold. Additionally, a resurgence in demand for the US dollar prompted some profit-taking at higher levels, leading to a minor correction.
Technical Analysis
Gold has been on a steep upward trend since the rebound from the October low, and after a continuous week of gains, it has now crossed back above the 200-day SMA. While short-term oscillators suggest an overbought condition, the recent geopolitical tensions could provide further momentum to the recent uptrend.
If buying interest continues, the recent two-month high of $1,986 may cap the upside in gold prices. A breakthrough of this hurdle could see bulls testing the psychological level of $2,000.
On the other hand, bearish actions could lead prices back to the previous double bottom at the $1,920-$1,926 range, with the next support at $1,904, which coincides with the 50-day SMA. If it fails to hold at this level, gold prices may drop to the August low of $1,885. A breach of this level could pave the way for a retest of the gap at $1834.
Overall, gold still faces persistent upward pressure, which has pushed the price close to overbought levels. Nonetheless, the bullish momentum has not waned. In terms of trading strategy, buying the dips is preferred.
Trading Recommendations
Trading Direction: Long
Entry Price: 1926
Target Price: 2020
Stop Loss: 1906
Valid Until: 2023-11-02 23:55:00
Support: 1929, 1922, 1913
Resistance: 1952, 1972, 1977
