Gold’s Resurgence Amid Geopolitical Unrest and Monetary Speculations

During Thursday’s Asian trading window, GOLD (XAU/USD) surged, hitting its highest level in two weeks. The robust recuperation from last week’s seven-month nadir of $1,810 reflects gold’s revived appeal as a preferred safe-haven asset. This is buoyed by escalating tensions in the Middle East and a receding US Dollar. Concurrently, the dip in global bond yields is amplifying gold’s allure.

Despite the equity market’s generally upbeat sentiment, gold’s uptick reflects a recovery of over a third of its September losses. Speculation that the Federal Reserve may be concluding its rate-hike phase suggests a bullish inclination for XAU/USD. Market participants, however, might await the impending US consumer inflation data.

Should inflation indicators lean towards temperance, it could consolidate expectations of the Fed’s unchanged stance in November and even hint at a potential rate reduction in 2024’s second quarter. Such a scenario would further depress the Greenback, enhancing the appeal of gold priced in USD.

However, an inflation uptick could leave room for another Fed rate increase this year, potentially triggering profit-taking in XAU/USD.

Gold Technical Briefing

Gold’s consistent trajectory beyond the $1,865-1,866 zone overnight might prelude a climb towards the proximate $1,885 barrier. Yet, while daily chart technical indicators have shifted from the bearish realm, they haven’t fully embraced a bullish sentiment. Thus, any upward progression could face significant resistance near the key $1,900 level. A sustained buying momentum might prompt bullish investors, steering gold towards challenging the 200-day SMA, hovering around the $1,928-1,930 vicinity.

Conversely, the prior resistance zone of $1,866-1,865 could now act as a downside cushion, preceding the $1,853-1,850 bracket. A subsequent support level emerges around $1,835-1,833, echoing a resistance level from a past trading range. Breaching this might reverse gold’s short-term optimism, exposing it to a revisit of the recent multi-month nadir near $1,810.