Technical Analysis

GOLD Price Analysis – Oct 12, 2023

By LonghornFX Technical Analysis
Oct 12, 20234 min
Signal 2023 05 25 122622 002

Daily Price Outlook

During the European trading session on a Thursday, Gold prices (XAU/USD) have managed to extend their winning streak and climbed to a two-week high. However, the reason for its upward trend can be attributed to the ongoing geopolitical tensions in the Middle East, which continue to push investors toward gold as a safe-haven asset. Meanwhile, the bearish bias in the US Dollar was seen as another key factor that has been lending support to gold's upward movement.

Gold Prices Recover Despite Stock Market Strength

As we all are well aware Gold prices have recovered more than 30% of the losses they experienced in September. This positive trend continues even though the stock markets are showing green signals. However, the reason for this positive trend is the belief that the Federal Reserve is getting closer to ending its cycle of interest rate hikes. This expectation is making the perspective for XAU/USD more favorable for an upward movement.

Although, this bullish trend might slow down as investors await the latest US consumer inflation figures, which are due later in the North American session. This keeps the investors cautious about placing any strong position.

Moving ahead, the upcoming US Consumer Price Index report will give some solid clues regarding the Federal Reserve's future interest rate decisions, which will likely affect the demand for the US Dollar and impact the price of gold in the near term future.

Therefore, it is important to keep an eye on the Consumer Price Index (CPI) because if it shows that inflation in the US is slowing down, the Federal Reserve is more likely to maintain current interest rates in November. This could weaken the US dollar, making gold a more attractive option for investors.

On the flip side, if the CPI report indicates strong inflation, any immediate impact on gold prices is expected to be short-lived. Notably, the headline CPI is projected to have slowed to 0.3% in September, with an annual rate of 3.6%. The Core CPI, which garners more attention, is expected to remain at a 0.3% monthly rate and show a 4.1% yearly increase.

Ongoing Conflict in the Middle East and Economic Indicators Influence Gold

Moreover, the ongoing Israel-Palestine conflict, coupled with escalating Middle East tensions, is driving investors towards gold as a safe-haven asset. This trend is further fueled by the recent dip in the value of the US Dollar.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

On October 12, Gold (XAU/USD) exhibited a positive trajectory, registering a modest 0.31% gain to settle at $1,878.9 as reflected in the 4-hour chart. A broader analysis reveals the pivot point for the precious metal anchored at $1,831.

In terms of resistance barriers, the first immediate hurdle stands at $1,851, followed closely by $1,869 and a more formidable barrier at $1,890. On the support end, Gold finds a preliminary cushion at $1,813, with deeper anchors set at $1,792 and further down at $1,774.

Technical indicators are pointing toward the bullish side. The Relative Strength Index (RSI) registers a value of 76, which is indicative of overbought conditions. This often signals a strong buying trend, but traders should exercise caution as it may also hint at potential pullbacks. The Moving Average Convergence Divergence (MACD) portrays an upward momentum, with the MACD line at 1.59 crossing above its signal line, which stands at 9.8. Furthermore, Gold is currently trading above its 50-day Exponential Moving Average (EMA), which is priced at $1,856, further emphasizing a short-term bullish trend.

In conclusion, the prevailing sentiment for Gold remains bullish, especially as the metal maintains its position above the $1,863 mark. If XAU/USD manages to break through the $1,880 resistance level, we could witness a heightened buying trend. The ongoing scenario presents a robust case for Gold's positive momentum, although investors and traders are advised to monitor key technical benchmarks and remain vigilant to potential shifts in the market landscape.

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