Technical Analysis

GOLD Price Analysis – Oct 17, 2023

By LonghornFX Technical Analysis
Oct 17, 20234 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold prices (XAU/USD) have failed to maintain their previous upward momentum and have lost some of their traction for the day. The precious metal is currently maintaining a bearish tone as it enters the European session. This is primarily due to a positive risk sentiment in the market, which is diminishing the appeal of traditional safe-haven assets. Furthermore, the higher US Treasury bond yields, buoyed by increasing expectations of further policy tightening by the Federal Reserve (Fed), represent another substantial factor that is exerting downward pressure on the non-yielding yellow metal.

However, the losses in the gold price could be short-lived, thanks to the ongoing Israel-Hamas conflict, which may help safe-haven gold limit its declines. In the meantime, the growing belief that the Federal Reserve (Fed) will maintain unchanged interest rates for the second consecutive time in November, should provide some support for XAU/USD.

Moreover, the dovish expectations surrounding the Federal Reserve's (Fed) monetary policy are putting pressure on US Dollar (USD) bulls, which is likely to limit losses for the US Dollar-denominated commodity. Traders may also choose to await signals regarding the Fed's future rate-hike decisions before engaging in directional trades.

Gold Price and Market Analysis Amid Ongoing Geopolitical Factors

Philadelphia Fed President Patrick Harker stated on Monday that the central bank should keep rates at their current level unless there is a significant change in the data. However, last week's US consumer inflation figures left room for the possibility of one more Fed rate hike by the end of the year. The potential for further tightening of monetary policy by the Fed continues to bolster elevated US bond yields, providing a tailwind for the US Dollar.

Traders are currently turning their attention to the upcoming US Retail Sales data for market direction, but the spotlight will remain on Fed Chair Jerome Powell's scheduled speech on Thursday. It's anticipated that US Retail Sales may have increased by 0.3% in September, with sales, excluding automobiles, expected to record a modest uptick of 0.2% for the reported month.

Escalating Geopolitical Tensions Impacting Gold Prices

Gold prices might continue to rise due to the ongoing conflict between Israel and Hamas, which could potentially escalate into a broader proxy war involving Iran. The Israel Defense Forces chief has suggested that the army will soon enter the Gaza Strip to target the Hamas group.

Thereby, Israel has advised Palestinians to evacuate to the southern area of the Gaza City enclave in anticipation of a large-scale ground assault against the terrorist activities. Israel's Prime Minister Benjamin Netanyahu's office has denied reports of a cease-fire for humanitarian aid and the evacuation of Gaza residents with international passports to Egypt.

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

GOLD (XAU/USD) - Technical Analysis

As of October 17, gold is trading at $1915.00, marking a significant place in the trading charts. With a focus on a 4-hour chart timeframe, several key price levels emerge to shape the day's trading landscape. The pivot point stands firm at $1909. Investors and traders would do well to watch out for the immediate resistance positioned at $1923, followed by subsequent resistances at $1933 and $1948. On the other side of the spectrum, immediate support is found at $1897. Further declines might find support at $1883 and then more robust support at the $1868 level.

Diving deeper into the technical indicators, the Relative Strength Index (RSI) is clocking in at 57. This value indicates a mild bullish sentiment, as the RSI figure surpasses the 50-mark, hinting at a slight tilt towards buying momentum in the market.

The 50-Day Exponential Moving Average (EMA) provides a valuable touchstone, currently resting at $1896.00. With the gold price trading above this EMA, it signifies a short-term bullish trend. This further substantiates the notion that the sentiment for gold remains buoyant, at least in the near term.

While specific chart patterns are yet to fully manifest, it's paramount for investors to remain vigilant. Patterns such as symmetrical triangles or upward channels could provide crucial insights into potential price breakouts, either bullish or bearish.

To sum it up, the overall trend for gold seems to be bullish, especially when prices remain above the $1896 mark. Conversely, slipping below this price could introduce bearish sentiments. As for the short-term forecast, given the prevailing indicators and price levels, gold may very well test its resistance levels in the near future.

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