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Gold Technical Analysis: Heading Towards New Buying Levels

We still prefer to buy gold from every downward level.

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    • The recent recovery of the US dollar and the rise in bond yields weakened the price of gold (XAU/USD), and it was exposed to selling operations that pushed it towards the support level of $1,956 per ounce before settling around the level of $1,970 per ounce at the time of writing the analysis.
    • In general, gold prices emerged from a weekly loss of about 0.3%, but they are still high by about 9% since the beginning of the year until now.
    • At the same time, silver prices, the sister commodity of gold, are trying to maintain the level of $23 per ounce.
    • The price of the white metal declined about 1% last week, adding to its loss since the beginning of the year until now, which exceeded 4%: exclusively, it was all about the dollar and bond yields since the beginning of the week's trading.

    Gold Market Is Sensitive to Fluctuations in Interest Rates

    After the huge decline in Treasury yields last week, US bond yields rebounded. The benchmark ten-year yield rose by 10.2 basis points to 4.66%. Two-year bond yields rose about 11 basis points to above 4.94%, while 30-year bond yields rose eight basis points to nearly 4.83%. Last week, the US bond market responded to US Federal Reserve Chairman Jerome Powell's more pessimistic policy, lower-than-expected selling from the Treasury in the third quarter, and a weaker-than-expected US jobs report. Usually, the gold market is sensitive to fluctuations in interest rates because it can affect the opportunity cost of holding non-yielding bullion.

    The US Dollar Index (DXY), a measure of the US currency's performance against a basket of major currencies, rose to 105.70 and year to date, the index has risen by approximately 2%. As is known, the rise in the value of the dollar is bad for goods priced in dollars because it makes it more expensive for foreign investors to buy them.

    In the world of economic data, there will not be much information that affects gold and silver prices. Next week will be the main event as the US Consumer Price Index (CPI) and Producer Price Index (PPI) for October will be published. Moreover, the Consumer Price Index and Producer Price Index are expected to rise on an annual basis. In general, the US Central Bank monitors inflation levels to determine the future of its monetary policy and is prepared to raise interest rates more times to contain record inflation.

    As for other metals markets, copper futures rose to $3.7115 per pound. Platinum futures rose to $916.40 an ounce. Palladium futures fell to $1,111.00 per ounce.

    Gold price forecast for XAU/USD today

    According to the performance on the daily chart below, the price of gold XAU/USD is in a downward correction phase. The continued strength of the US dollar, rising bond yields, and the easing of global geopolitical tensions could push the price of gold to stronger downward levels, the closest of which are currently $1952, $1945, and $1930, respectively. In general, we still prefer to buy gold from every downward level. On the other hand, and in the same time period, the opportunity for the price of gold XAU/USD to return to the psychological resistance level of $2,000 per ounce is still possible if the scope of global geopolitical tensions widens, especially in the Middle East.

    Recently, the markets are today scheduled to hear new statements from Jerome Powell, the governor of the US Federal Reserve. Finally, any hints of further tightening of the bank's policy could support the dollar and negatively impact the price of gold today.

    XAU/USD chart

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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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