Article by: ETO Markets
During Asian hours on Thursday, gold prices (XAU/USD) rebounded slightly, ending a six-day losing streak and currently trading above $2,600. The market is generally focused on the US Consumer price Index (CPI) due out later today, which is one of the main reasons for investors to stay on the sidelines before repositioning the trade. The Fed minutes showed that while some members supported an aggressive 50 basis point rate cut, the overall view favored a 25 basis point cut in November. This more dovish policy stance supports the strength of the US dollar (USD), limiting the upside for gold.
In addition, the Fed's more cautious policy path has diminished gold's appeal as a non-yielding asset, making it difficult for the price to rise significantly. However, tensions in the Middle East, including the confrontation between Israel and Iran, continue to provide support for safe-haven demand, supporting the fundamental backdrop for gold. Overall, the direction of gold prices is awaiting guidance from the US CPI data, while market expectations about the path of Federal Reserve policy and geopolitical risks will continue to dominate price volatility in the short term.
From a technical perspective, gold prices broke below the $… support area this week, a level that represents the lower end of a short-term trading range and is seen as a key trigger for bears. While gold has held the $… mark, a sustained break below that level could trigger further technical selling. On the downside, the XAU/USD is expected to test the $… support level, a break below which could lead to further declines towards the $…-… area and even the psychological $… level.
Conversely, if gold can hold above $… and break the support of the $…-… trading band, it is expected to test resistance in the $…-… area again. If this area is effectively broken, gold prices are expected to rise to the $…-… supply zone and even challenge the September high of $…-…. A break above the psychological level of $… would provide strong support for further continuation of the upward trend.
