Technical Analysis

GOLD Price Analysis – Oct 27, 2023

By LonghornFX Technical Analysis
Oct 27, 20234 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold price (XAU/USD) has maintained its bullish bias and has been going up for three days. It's now getting close to its multi-month high level. However, this upward movement is mainly because people see gold as a safe place to put their money, especially during times when conflict risks in the Middle East are rising. Investors tend to turn to gold when things are uncertain. Furthermore, the stable value of the US Dollar, which hasn't been fluctuating much, is also boosting the demand for gold.

Nevertheless, the price of gold has not yet reached the levels it attained five months ago. This is largely due to the belief that the Federal Reserve will maintain a cautious approach to interest rates, thereby keeping them higher for an extended duration. When interest rates are high, gold becomes a less enticing investment option.

Global Tensions and Fed's Stance Impacting Gold Prices

It's important to mention that the ongoing global tensions are still supporting the demand for safe-haven assets like gold. Recent events, such as the brief entry of Israeli troops and tanks into Gaza, and talks about a possible larger-scale invasion, have heightened market and investor concerns. As a result, the price of gold has been on the rise.

Moreover, the US military carried out airstrikes in Syria as a response to attacks on American troops in that area. President Joe Biden directly warned Iran's leader about the consequences of targeting US military bases and personnel in the Middle East. All of these events together are playing a part in the ups and downs we're seeing in the price of gold.

US Economic Growth Strong, But Fed's Next Move Uncertain

Recent data shows that the US economy had a strong third quarter, with a 4.9% expansion. This is the fastest growth in almost two years. With this robust performance, it suggests that the Federal Reserve can stick to its strict policies and might even think about raising interest rates again before the year ends.

However, the latest data indicating lower-than-expected inflation has sparked speculation that the Federal Reserve could opt to keep its current approach intact come November. Consequently, investors are on the edge, eagerly anticipating the release of the US PCE Price Index data to better understand the Federal Reserve's possible moves before making substantial investment choices.

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

GOLD (XAU/USD) - Technical Analysis

Amidst the volatile global economic landscape, gold has consistently stood as a beacon for investors, offering a sanctuary during unpredictable times. On October 27, gold was traded at $1989.045, marking a rise of 0.21% within the last 24 hours. This data, sourced from a 4-hour chart, offers a granular look at the precious metal's intraday movements. The pivot point for the day stood at $1986, with immediate resistances marked at $1998, $2012, and $2023. On the flip side, support levels were established at $1963, $1947, and $1932.

The technical indicators paint an interesting picture. The Relative Strength Index (RSI) positioned itself at 62, indicating a bullish sentiment. While not in the overbought territory, it's noteworthy that the RSI is above the midpoint of 50, suggesting potential for further upside. Additionally, gold's price trajectory over its 50-Day Exponential Moving Average (50 EMA) further cements its short-term bullish stance, given that the metal is trading above the 50 EMA benchmark of $1960.

Chart analysis reveals an upward channel, highlighting a series of higher highs and lows. This pattern underscores a bullish bias, suggesting that if the current trend persists, gold might touch the upper echelons of the channel in the near future. In conclusion, the overall sentiment for gold appears bullish, especially given its position above the critical 50 EMA and the observed upward channel.

However, a dip below $1812 might tilt the scales to a bearish outlook. In the upcoming sessions, it's plausible that gold could challenge the resistance level at $1998. As global events and economic indicators continuously shift, investors should remain vigilant and abreast of updates that might impact gold's trajectory.

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