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Gold Technical Analysis: Attempting to Reverse the Trend

  • At the end of last week's trading, the XAU/USD gold price succeeded in rebounding upwards with gains extending to the resistance level of $1930 per ounce.
  • This was before closing the trading stable around the level of $1923 per ounce.
  • The performance came with the recovery of prices from strong selling operations that the gold price XAU/USD reached the support level of $1901 per ounce.
  • This was a reaction to the effect of the strength of the US dollar.

Despite this, it was pointed out a lot about the advantage of buying gold from every downward level. There are other factors that will support gold led by global geopolitical tensions and fears of a global economic recession led by China.

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    Elsewhere, US stock indexes on Wall Street ended a volatile week of trading with stocks broadly lower on Friday, giving the S&P 500 its second straight losing week. According to the performance, the main index fell by 1.2 percent, which is its first loss in three days. The Dow Jones Industrial Average fell by 0.8%, and the Nasdaq Composite Index fell by 1.6%.

    According to the trades, the shares of American car manufacturers proved their resilience after members of the United Auto Workers union left their jobs in several factories overnight. Accordingly, Ford shares fell by 0.1% and General Motors shares rose by 0.9%. Stellantis shares rose 1.9% in trading on the Milan Stock Exchange in Italy. In general, the market recorded some gains earlier this week after several healthy indicators on the American economy. Wall Street markets are now watching economic updates ahead of the Federal Reserve's interest rate policy meeting this week. The US central bank is expected to keep interest rates steady after spending most of the past two years raising interest rates in an attempt to curb inflation.

    Bolstering the spirits of the American market was a report issued on Thursday that states that American shoppers spent more at retailers last month than economists expected. A separate report on Thursday morning said that fewer workers applied for unemployment benefits last week than expected.

    A third report on Thursday also said that prices paid at the wholesale level rose more last month than economists expected. And that could be a depressing signal for the household if higher-than-expected inflation is passed on to shoppers at the consumer level. Meanwhile, a closely watched University of Michigan survey showed that US consumer sentiment dipped slightly in September. However, the latest reading shows that public sentiment remains strong. It also said that consumers cut their expectations for inflation next year to 3.1%, the lowest reading since March 2021.

    For its part, the US central bank raised interest rates strongly during 2022 and 2023 in an attempt to curb inflation but maintained interest rate levels at its last meeting. Inflation in general declines to the central bank's target of 2%. Consumer inflation rose more than expected in August, but higher gasoline prices were the biggest driver. Oil prices rose during the summer after the Kingdom of Saudi Arabia decided to maintain production cuts. This raised concerns about rising gasoline prices and fueling inflation.

    Investors are betting overwhelmingly that the Federal Reserve will keep US interest rates steady when it concludes its two-day meeting on Wednesday. They also expect the central bank to keep interest rates steady for the rest of the year. The Federal Reserve said it is still willing to continue raising interest rates if it appears necessary to continue fighting inflation.

    Today's XAU/USD Gold Price Predictions:

    According to the performance on the daily chart below, there are attempts for the price of gold XAU/USD to break the downward trend. As I mentioned before, this will happen if the prices move towards the resistance levels of 1945 and 1970 dollars respectively. This will depend on the calmness and frequency of the gains of the US dollar and the increase in the frequency of buying gold due to the stimulating factors for the market as I mentioned at the beginning of the analysis.

    According to the performance on today's chart below, the return of the gold price XAU/USD towards the support levels of 1915 and 1910 dollars, confirmation of the continued control of the bears on the trend for a while. The 1885 dollar support will be the most important for thinking about buying gold.

    I expect a quiet trading session today as the market is devoid of important data, along with investors' anticipation of the important events that will be listed this week.

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    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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