The rise in gold is being driven primarily by the same factors as always: geopolitical tension in the Middle East and Eastern Europe. These conflicts are the kind of thing that always make the market nervous, pushing investors towards gold, which is like the "safe haven" when things get rough. And there’s more: investors are also watching the U.S. elections, which could result in a Trump victory, leading to changes in U.S. policies that could shake the market even further.
Now, beyond these political issues, people are also speculating about monetary policy. The general belief is that central banks around the world, including the U.S. Fed, will continue easing monetary policy (in other words, lowering interest rates). In fact, according to the FedWatch tool, there’s an 85% chance the Fed will cut interest rates by 0.25% in September, reinforcing this expectation. Meanwhile, in Europe, the ECB has already cut rates by 25 basis points, but it hasn’t made clear what it will do next, leaving everyone somewhat in the dark.
In the meantime, the dollar got a bit of a boost from U.S. retail sales data, which came in above expectations (0.4% in September versus 0.3% expected). This provided some short-term support for the dollar, but the pressure for a rate cut remains, keeping downward pressure on the currency.
Technical Analysis
Bollinger Bands: Showing moderate growth, but they’re not quite keeping up with the "bulls" (those betting on the uptrend). This signals that the market might be slowing down.
MACD: Continues pointing upward, indicating a buy, with the histogram above the signal line.
Stochastic: Indicates that gold might be overbought in the short term, suggesting a possible reversal soon.
Support and Resistance Levels:
- Resistance: 2740.53, 2760.00, 2775.00, 2790.00
- Support: 2720.00, 2700.00, 2685.56, 2670.00
Trading Scenarios
Long: If gold breaks through 2740.53, it could be a good opportunity to enter a buy position targeting 2775.00. Don’t forget to protect your position with a Stop Loss at 2720.00. Execution time: 1 to 2 days.
Short: If the price hits the resistance at 2740.53 but fails to break it, and then falls below 2720.00, it could be time to consider short positions, targeting 2670.00. The Stop Loss for this scenario would be 2740.53.
Gold is in a delicate position, with room to keep rising, but also showing signs of potentially being "tired." Keep an eye on key levels and market movements, as the game could change at any moment, depending on political and monetary decisions around the world.