As traders in Asia begin their week, gold prices remain resilient, hovering around the $2,650 mark. This stability comes despite a backdrop of positive momentum generated by new stimulus measures from China. However, the trader sentiment appears cautious; many are reluctant to make substantial trades ahead of a pivotal speech from US Federal Reserve Chairman Jerome Powell, scheduled for later today. Given that Powell previously refrained from addressing monetary policy or broader economic conditions, market participants are eagerly anticipating insights regarding potential interest rate cuts in the near future.
The current market analysis indicates a 52% likelihood of the Fed lowering rates by 50 basis points in November, according to the CME Group’s FedWatch Tool. This marks a slight increase from last week’s estimates, reflecting a growing confidence among investors. However, the recent inflation figures—particularly the core Personal Consumption Expenditures (PCE) index—have not significantly altered market expectations, reinforcing the cautious mood among traders.
Interestingly, gold’s recent surge to a peak of $2,686 faced a sharp pullback as traders opted to realize profits. The dip in gold prices occurs in a complex environment marked by rising geopolitical concerns, particularly in the Middle East, and attempts by China to stimulate its economy. Amid these external pressures, gold continues to encounter selling pressure, which raises critical questions about the metal’s future trajectory.
Technical analysis of the XAUUSD charts reveals noteworthy insights. The daily chart, dotted with Fibonacci expansion indicators, illustrates recent price movements and suggests potential future pivots. The presence of resistance levels has become increasingly significant as gold reached all-time highs, following which there was a notable rejection. This scenario sets the stage for a potential bearish sentiment, as indicated by the technical signals.
Moving to the four-hour timeframe, the analysis delves deeper into the market’s directionality. A crucial factor for a confirmed bearish stance is the anticipated break below the trendline support and the identified demand zone. Traders should exercise caution, as the market is expected to retest the broken demand zone. Such a retest could provide an advantageous entry point for those looking to capitalize on this bearish sentiment, rather than engaging in aggressive trading maneuvers.
Analysts are projecting a bearish direction for gold prices, setting a target at approximately $2,541.13. However, to mitigate risk, an invalidation point is identified above $2,675.85, signaling that any movement beyond this threshold could necessitate a reassessment of the current bearish outlook.
The prevailing economic climate adds layers of complexity to the gold market. As traders navigate through these turbulent waters, staying informed on upcoming events—such as Powell’s speech—and closely monitoring inflation metrics will remain critical. The interplay of geopolitical pressures and central bank policies will likely continue to dictate market movements, making this a pivotal time for gold investors.