Gold is showing signs of recovery, riding a bullish move that began at the end of last week after retreating from the lows seen since September 20. Now, the price of gold is testing the 2660.00 mark, with potential to break through this resistance.
What is pushing gold higher? Expectations that major central banks (such as the European Central Bank and the U.S. Federal Reserve) will ease monetary policy. The idea is that with lower interest rates, investors will seek refuge in assets like gold.
Key Factors
The ECB is expected to cut its benchmark rate by 25 basis points next Thursday (October 17).
The Fed (U.S.) is also likely to make another rate cut in November, but the chance of a 50 basis points cut has been ruled out following comments from Jerome Powell.
U.S. inflation has slowed slightly but is still above forecasts, influencing regulators' decisions.
Recent Macroeconomic Indicators
- The U.S. consumer price index rose 0.2% in September (analysts had expected 0.1%).
- The core index (excluding food and energy) rose 0.3% for the month and 3.3% annually.
- Producer price index fell from 1.9% to 1.8%.
- Consumer confidence index (University of Michigan) fell from 70.1 to 68.9 points.
Geopolitically, gold is also being favored by growing uncertainty, especially with the approach of the U.S. elections, which naturally increases demand for safe-haven assets like the precious metal.
Technical Analysis – Key Levels
- Resistance: 2670.00, 2685.56, 2700.00, 2720.00.
- Support: 2655.00, 2640.00, 2623.84, 2613.83.
On the daily chart, the price is holding in a sideways range (flat), meaning there is no clear upward or downward trend yet. However, take note: the MACD indicates a possible bullish reversal, while the Stochastic shows gold may be nearing overvaluation in the short term.
Trading Strategy
Buy Scenario: If the price breaks through the 2670.00 level, this signals a buying (long) opportunity, targeting 2700.00. A Stop Loss can be placed at 2655.00. Time frame: 1-2 days.
Sell Scenario: If the price fails to break 2670.00 and falls below 2655.00, this would be a sell (short) signal, targeting 2623.84. Stop Loss at 2670.00.
Conclusion
Gold is in a state of anticipation, awaiting the next moves from central banks. If the ECB and Fed continue with rate cuts, gold could keep gaining strength. However, in the short term, the risk of a correction also exists, so it's wise to keep an eye on the technical levels and not forget to use a well-placed Stop Loss.