Gold price (XAU/USD) remains under pressure as the European trading session approaches on Monday, yet there is a noticeable lack of aggressive selling. The metal continues to hover just below the record peak reached last week. A series of stimulus measures introduced by China has boosted investor confidence in riskier assets, contributing to a supportive environment for gold. However, rising geopolitical tensions in the Middle East are keeping downward pressure at bay, providing a safety net for the precious metal.
Market Influences on Gold Prices
Investors are closely monitoring a range of factors influencing gold prices. The recent announcements of stimulus measures from China have sparked increased interest in risk assets, indirectly benefiting gold. Despite this bullish sentiment in risk markets, concerns over escalating geopolitical issues, particularly in the Middle East, are limiting the potential for significant declines in gold prices.
Additionally, there are growing expectations that the Federal Reserve will cut borrowing costs by another 50 basis points during its upcoming policy meeting in November. Such a move would further bolster the appeal of gold, which is considered a non-yielding asset. The prospect of lower interest rates typically supports gold, as it diminishes the opportunity cost of holding the metal.
U.S. Dollar Dynamics
The U.S. dollar is currently experiencing a period of sideways movement, maintaining levels above its lowest point since July 2023, reached on Friday. This stabilization suggests that the path of least resistance for gold (XAU/USD) may trend upward, particularly as traders look to Fed Chair Jerome Powell’s forthcoming speech for fresh market insights and potential catalysts.
Technical Analysis: Support and Resistance Levels
From a technical standpoint, any potential decline in gold prices is likely to encounter robust support near the ascending trend-channel resistance breakpoint around the $2,625 level. Should this support level fail, the next significant barrier to watch would be the $2,600 mark. A decisive break below $2,600 could open the floodgates for further declines, possibly leading to notable downward movements.
The Relative Strength Index (RSI) on the daily chart is currently hovering near the overbought territory. If the gold price does begin to fall, it could accelerate towards the intermediate support level at $2,560, and possibly even lower, targeting the $2,535 to $2,530 region.
Potential Upside Movements
Conversely, if gold prices rally, the immediate resistance appears to be in the $2,670 to $2,671 range. This is followed by the critical threshold of $2,685 to $2,686, which corresponds to the all-time high reached last Thursday. If gold successfully breaches the $2,700 level, it could signal a renewed surge for bullish traders and lay the groundwork for an extended upward trend that has persisted for several months.
Conclusion
As gold prices navigate through a complex landscape of economic indicators and geopolitical factors, traders remain vigilant. The interplay between risk appetite, Federal Reserve policies, and technical signals will be pivotal in determining the short-term trajectory of gold. With key levels of support and resistance clearly defined, market participants are poised to react to Jerome Powell’s upcoming speech, which could provide essential direction in the near term.
Investors should continue to monitor global events and economic announcements, as these will undoubtedly influence gold’s performance in the coming weeks. Whether gold can maintain its bullish momentum or faces challenges in the near future remains to be seen, but the current environment suggests that both upward and downward movements are highly contingent on external market forces.
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