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Abstract: This week, the gold market was in trouble as the USD strengthened and investors waited for the Federal Reserve's November policy meeting. Will gold return to US$2,000?

Fundamentals

The strong rise of gold price from the recent bottom of US$1,810 was mainly due to investors' expectations of the conflict between Palestine and Israel. Therefore, traders and investors have been seeking refuge in gold for fear of broader geopolitical conflicts, pushing the price of gold above US$2,000.

Nevertheless, as the price of gold continued to decline for two trading days, it continued to weaken below US$2,000 in overnight trading. So, will the price of gold rise again?

Now, all eyes will be on the policy meeting of the Federal Open Market Committee (FOMC) in November. The market now expects the Fed to keep the interest rate unchanged in the range of 5.25% to 5.5%. The futures market also suspended interest rate hikes at the December pricing meeting.

Will Fed Chairman Powell hint at the next step in the press conference after the meeting of the FOMC? Financial markets will certainly pay close attention.

In terms of data, the new manufacturing and ADP employment data will be released in the New York session today, which can let people know the expectations for the fourth quarter. Important October non-farm payroll data will be released on Friday. Economists predict that 180,000 jobs will be created, and the unemployment rate is 3.8%.

In other respects, according to the data of the World Gold Council, in the first nine months of 2023, the global central banks' gold purchases hit a record high. As of the third quarter, the gold demand of central banks increased by 14% year-on-year.

The report said: "With the strong pace of central bank demand after the slowdown in the second quarter, we expect the annual total to be close to last year's record." Moreover, "the external possibility will exceed this number."

In overnight trading, the U.S. Dollar Index rose 0.1% to 106.77. The USD, a measure of the USD against a basket of currencies, was flat in October. A stronger USD is not positive for commodities denominated in USD, as it makes them more expensive for investors to buy.

U.S. Treasury Securities yields rose across the board, with the yield on the benchmark 10-year Treasury Securities rising five basis points to 4.925%. The yield on the two-year Treasury Securities rose one basis point to 5.081%, while the yield on the 30-year Treasury Securities rose six basis points to 5.084%.

Gold is sensitive to interest rate changes because it will affect the opportunity cost of holding unprofitable gold.

Technical Analysis

Gold prices closed the month yesterday with a solid white body with a "short upper lead".

In fact, in our conversations with other traders, we have talked about how the monthly close for gold should be "included". I expect that the monthly close for gold will be "infinitely close or flat" at the US$1,980 level. The XAUUSD's price target at yesterday's close was US$1,982, which is in line with our "infinitely close or flat" level.

What led to this conclusion? The answer lies in the weighted averaging of their fair prices.

Therefore, what is the prediction now for the market's direction over the next month? My conclusion is that gold prices will continue to move higher in the coming month. At the end of November, the gold price will record a black body with a long upper shadow and a long lower shadow. The price fluctuation range is the US$1,945 - $2,030. It is recommended to buy the dips and go short at the highs.

Trading Recommendations

Trading direction: Long

Entry price: 1968

Target price: 2030

Stop loss: 1944

Deadline: 2023-11-15 23:55:00

Support: 1970, 1962, 1952, 1944

Resistance: 1986, 1993, 1997, 2006