The Gold spot price, XAU/USD, is displaying remarkable resilience, firmly above the 20 and 200-day Simple Moving Average (SMA) convergence, currently hovering between $1,922 and $1,923, with an ascent towards $1,930. Investors are proceeding with caution as they anticipate key decisions from the Federal Reserve (Fed), the Bank of England (BoE), and the Bank of Japan (BoJ). Interestingly, the British central bank stands alone in its expected rate hike stance.
In a departure from recent trends, akin to the European Central Bank’s (ECB) actions last week, the BoE is anticipated to introduce a dovish 25 basis point rate hike, with a notable emphasis on stagflation risks. Likewise, market participants are factoring in the likelihood that the BoJ will steadfastly maintain its ultra-dovish policy stance.
On the Fed’s front, there is a prevailing expectation of a measured pause, as the central bank endeavors to convince markets that the tightening cycle is far from its conclusion. Looking ahead to the November and December meetings, some investors are placing their bets on a final rate hike, influenced by robust economic activity coupled with a mixed labor market outlook. Furthermore, the Fed will release updated dot plots and fresh macroeconomic forecasts, adding an extra layer of intrigue to the proceedings.
Simultaneously, U.S. Yields, often viewed as the opportunity cost of holding Gold, exhibit mixed performance but remain elevated, thereby restraining the upside potential of XAU/USD. The 10-year bond yield currently stands at 4.33%, experiencing modest losses for the day. The 2-year yield, meanwhile, has climbed by 0.50% to reach 5.06%, while the 5-year yield is down by 0.30%, resting at 4.45%.
XAU/USD Levels to Monitor: In consideration of the daily chart, XAU/USD presents a cautiously bullish outlook, characterized by the resilience and growing strength of the bulls. The Relative Strength Index (RSI) exhibits a bullish tilt with a positive upward slope above the 50 threshold. Additionally, the Moving Average Convergence (MACD) histogram reveals a surge in green bars. Notably, the pair remains above the 20 and 200-day Simple Moving Averages (SMAs), underscoring the bulls’ overarching control. Nevertheless, buyers should set their sights on the $1,946 level, represented by the 100-day SMA, to validate the ongoing recovery.
Support levels: $1,923 – $1,920 (200 and 20-day SMA), $1,910, $1,900.
Resistance levels: $1,946 (100-day SMA), $1,970, $2,000.