Article by: ETO Markets
Gold prices is significantly fluctuating after U.S. economic data showed strong growth and a resilient labor market, diminishing expectations for an immediate rate cut by the Federal Reserve (Fed). The Fed is set to meet on November 7, with markets anticipating a 25-basis point cut, though expectations have dipped slightly as robust data supports the case for a steady policy approach.
In Japan, the Bank of Japan kept its rate steady at 0.25%, causing the yen to weaken and providing strength to the U.S. dollar. This trend, combined with lower U.S. yields and caution ahead of Friday’s Nonfarm Payrolls (NFP) report, drove further losses for the Australian dollar (AUD). Concerns over China’s economic outlook—reflected in weak industrial data and sliding copper and iron ore prices—added to the AUD’s pressure, as the Reserve Bank of Australia (RBA) is unlikely to cut rates soon.
The euro (EUR) continued its recovery against the dollar, nearing the 1.0900 mark. The European Central Bank (ECB) recently cut rates but remains cautious about future moves, with ECB President Christine Lagarde optimistic that inflation will reach the 2% target by 2025. However, differing views within the ECB raise questions about the pace of further rate cuts.
As the Fed and ECB prepare to make their next moves, the U.S. dollar’s strength is likely to be influenced by political outcomes, including the upcoming U.S. presidential election. Uncertainty over China’s economy may keep downward pressure on the AUD, while broader economic conditions and policy changes will shape currency trends across global markets.
Gold prices (XAU/USD) rebounded on Friday, recovering from earlier losses amid uncertainties surrounding the US presidential election and ongoing geopolitical tensions in the Middle East, both of which reinforced gold's appeal as a traditional safe-haven asset. However, rising US Treasury yields and a strengthening US dollar are tempering gains in gold, as traders await the US October employment report, including Nonfarm Payrolls (NFP), the unemployment rate, and average hourly earnings, for further direction. A strong jobs report could reduce expectations for Federal Reserve rate cuts, potentially pressuring the non-yielding metal. Despite this, gold may maintain an upward trend, potentially approaching $… if election risks persist and rate cut expectations hold. Meanwhile, inflation indicators such as the US Personal Consumption Expenditures (PCE) Price Index, which rose 2.1% year-over-year in September, align with market forecasts, signaling steady inflation levels. Additionally, US initial jobless claims for the week ending October 26 decreased to 216,000, below the expected 230,000, and markets are now nearly certain of a 25-basis-point Fed rate cut in November.
From a technical perspective, the daily XAU/USD chart shows a strong uptrend, with price well-supported above the 100-day EMA and a bullish 14-day RSI around 62.30, indicating momentum for further upside. Key resistance lies in the all-time high zone of $…–$…, a critical barrier; a decisive break here could trigger a rally toward $…. On the downside, Fibonacci retracement levels, notably the 61.8% level at $…, may provide support if the current pullback continues. If a break occurs, the next support level to watch is the psychological round level of $….
The WTI oil market is currently navigating a complex landscape marked by geopolitical tensions and significant production adjustments. Oil price stability is being influenced by escalating tensions, particularly concerning Iran's potential military actions. Reports from Israeli intelligence indicate that Iran may be preparing to launch a retaliatory strike on Israel from Iraqi territory. The steady price of around $… per barrel reflects a balance among these influences, with implications for future pricing and supply strategies as OPEC+ assesses its production levels in response to shifting demand dynamics. Ongoing developments, especially those related to Iran and U.S. production increases, will be crucial to monitor in the coming weeks.
In the technical view, the WTI/USD chart shows a downtrend, with the price trading within a descending channel and below the 55-day and 100-day simple moving averages, reinforcing bearish momentum. Key resistance is at $…, with a strong support zone near $…. A breakout above $…would signal potential bullish reversal, especially considering the geopolitical tension. Then, the next resistance level would be $…, supported by 100-day SMA. Conversely, failure to break this resistance may see prices return toward $… or lower level of $… (September low).
