Article by: ETO Markets

Gold prices (XAU/USD) continued to be on the defensive during the Asian session on Thursday, mainly under pressure from the strong US dollar. The dollar continued to rally, reaching a three-week high, as expectations of a further big Fed rate cut in November faded. The latest US ADP employment report showed that the private sector added 143K jobs in September, beating expectations of 120K, further indicating the robustness of the US labor market. As a result, investors have scaled back their expectations of a major interest rate cut by the Federal Reserve, further supporting the dollar and weighing on gold prices.

Nonetheless, the downward pressure on gold is supported by heightened geopolitical tensions. That sparked fears of an all-out war, driving safe-haven demand for gold. In addition, investors are waiting for Friday's U.S. nonfarm payrolls report (NFP) and the same day's jobless claims and ISM services PMI data to determine further direction for gold

From a technical point of view, the range-bound gold price this week can be seen as a bullish consolidation phase following previous strong gains. The technical indicators on the daily chart remain in positive territory and have retreated from overbought conditions, indicating that the upward trend in gold remains intact in the short term. The first resistance for gold is currently in the $…-$… area, followed by last week's all-time high of $…-$…. If gold breaks through this area and reaches the psychological level of $…, it will provide further momentum to gold bulls, pushing gold prices to extend their multi-month upward trend.

In terms of lower support, the $…-$… area continues to provide short-term support, and if this support level is effectively broken, it may trigger a technical sell-off, and gold will fall below $…, and may further explore the $… support level, and even fall to the key support level of the $…-$… area.