Gold Technical Analysis: Gold Is Exposed to Temporary Selling

We still prefer to buy gold from every downward level.

  • Since the start of trading this week, the price of gold XAU/USD has maintained the psychological resistance of $2,000 per ounce.
  • This price level represent its highest level in five months, amid increased investor demand for safe havens globally by rising geopolitical tensions in the Middle East and fears of the conflict expanding, threatening a third of the world's oil production.
  • Therefore, Gold prices are stabilizing around $1,985 per ounce amid temporary selling that pushed it towards $1,978 per ounce.

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Precious Metals As Safe Heavens

This week, precious metals - gold and silver - have served as a safe haven asset for investors and market participants. However, the prices of some precious metals, including platinum, have continued to decline due to the downward pressure that followed the decline in demand. While the world continues to monitor the conflict in the Middle East, metals such as gold and silver have seen an increase in demand. In fact, war is one of the main drivers that has caused these metals to trend higher.

In general, both investors and traders look for low-risk assets during times of instability. In this way, precious metals have long been a safe haven for risk mitigation and exposure. Meanwhile, interest rates continue to rise and stock indices continue to fall. This seems to indicate a high degree of uncertainty and volatility in different market environments. However, not all precious metal prices have reacted to the war between Israel and Hamas.

Notedly, not all precious metals have seen the same increase in demand. In fact, some are still suffering from falling prices and downward trends due to supply issues and other concerns. For example, while gold and silver prices have risen due to increased demand and global conflict, platinum and palladium prices have fallen by about 2.0-2.5%. Most analysts attribute this decline to falling demand in the automotive sector and the slowdown in global economic growth.

Unlike some other precious metal prices, platinum and palladium may face a tough winter. In fact, the indices face a series of global challenges, including the conflict in the Middle East between Israel and Hamas, the war between Ukraine and Russia, rising inflation risks, and rising interest rates. Therefore, all of these can impose high levels of risk and uncertainty on platinum and palladium.

On the other hand, with the price of platinum already falling after its lowest levels in the summer of 2023, it is safe to say that the trend is currently downward. In fact, both indicators show little or no signs of any reversal patterns or upward momentum that could help push prices back to the upward trend. However, it appears that current prices are forming lower lows and lower peaks than peaks, which further reinforces the downward trend. Also, this downward trend for platinum began during the spring season of 2023. So far, once prices peaked at just over $1,000 per ounce, they quickly fell back, broke through their previous lows, and began to decline sharply.

In the metals market as well, palladium prices have also fallen in recent weeks, in addition to showing steady monthly declines. Since the beginning of October, prices have fallen further, eventually forming new lows. This indicates a general downward trend, even though palladium prices are still not primarily affected by the conflict between Israel and Hamas. In fact, as it has not been largely affected by what is happening in the Middle East, the movement of palladium prices has recently begun to trend sideways. This seems to indicate general uncertainty, although it is worth noting that the industrial sector could boost demand for palladium.

In the long term, the impact of ongoing global conflicts on precious metal prices remains highly complex. Obviously, conflict can lead to increased demand for haven assets. On the other hand, it can also lead to economic disruption, which can reduce demand for precious metals. Shortly, investors and traders around the world will simply have to wait a little longer to know exactly which direction these indices will take.

Gold price forecast for XAU/USD today

There is no change in the direction for the price of gold XAU/USD, as the general trend is still upward and the return of the movement towards the psychological resistance of $2,000 per ounce is likely, and gold may test stronger peaks considering the continuation of global geopolitical tensions and the expansion of the conflict in the Middle East. Meanwhile, the stopping of the gains of the US dollar after the announcement of the US Federal Reserve today and if the US job numbers for the end of the week are weaker than expected. Currently, the closest levels of resistance for gold are $2,000, $2,025, and $2,060, respectively. Concurrently, the hopes of the bulls will evaporate if gold returns to the support levels of $1,945 and $1,930, respectively. Finally, we still prefer to buy gold from every downward level.

XAU/USD chart

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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.