Middle East situation ## goldTechnical Analysis#24K99 News On Thursday (October 10th), despite the US CPI data slightly higher than expected, the US initial jobless claims data performed poorly. This caused the US dollar index to plummet significantly from its high, while gold soared significantly after intense fluctuations, with the price of gold rising by 22 dollars within the day. In addition, the tense situation in the Middle East attracted safe-haven bids for gold.

After the United States released the latest economic data on Thursday, traders increased their bets on a 25-basis-point rate cut by the Federal Reserve in November, prompting gold to expand its gains.

FXtreet analyst Christian Borjon Valencia pointed out that in August, US inflation was slightly higher than expected, but the employment data offset this impact. The US Department of Labor announced that the number of people applying for unemployment benefits exceeded expectations, which could lead to a significant reduction in borrowing costs by the Federal Reserve.

Data on Thursday showed that the US Consumer Price Index (CPI) rose by 2.4% year-on-year in September, exceeding the expected 2.3%. The core CPI increased by 3.3% year-on-year, surpassing both the expectation and August's 3.2%.

In addition, the US September CPI rose by 0.2% month-on-month, in line with the previous month, and higher than the general expectation of 0.1%. The US September core CPI monthly increase remained steady at 0.3%, exceeding the 0.2% expectation.

A report from the US Department of Labor indicated that while monetary policy makers consider the next interest rate actions, the unexpected rise in the September year-on-year inflation rate in the US shows that inflation still has stickiness.

Pepperstone analyst Michael Brown stated that despite higher-than-expected US inflation data, the CPI data for September does not seem likely to substantially change the policy outlook of the FOMC.

Another set of data indicates that the number of initial jobless claims in the US rose to the highest level in over a year last week, reflecting a weak labor market. Part of the reason is the significant increase in initial jobless claims in Michigan and the impact of Hurricane Helen on some states.

Data released by the US Department of Labor on Thursday showed that for the week ending October 5, the number of initial jobless claims in the US rose from 0.225 million the previous week to 0.258 million, exceeding the estimated 0.23 million.

Due to higher-than-expected CPI data, the US dollar index briefly surged to 103.18, but due to poor initial claims data, the US dollar index subsequently retreated significantly from its high, ending Thursday down nearly 0.1% at 102.85.

Spot gold rebounded after six consecutive trading days of decline, ultimately closing up $22.13, or 0.85%, at $2629.84 per ounce.

According to CME's 'FedWatch' tool, the market currently expects an 80% probability of a 25-basis-point rate cut by the Fed next month, compared to 76% before the publication of the above economic data.

Due to gold's lack of yield, it has become the preferred investment in a rate-cut environment.

Allegiance Gold's Chief Operating Officer Alex Ebkarian stated that the US CPI data did not bring much surprise, but the employment data shows a weak trend, making the Fed more likely to cut rates, thereby boosting the price of gold.

Ebkarian added: "Due to the recent cooling of the gold rally in the past few days, it is now in a favorable position for renewed gains."

Looking ahead to Friday, Valencia stated that gold traders will closely monitor the release of the US Producer Price Index (PPI) and the University of Michigan Consumer Confidence Index.

Israel has received significant news.

In the Middle East, according to the latest report from US media Axios on Thursday, three US and Israeli officials told Axios that US President Biden and Israeli Prime Minister Netanyahu are closer to reaching an agreement on Israel's plans to retaliate against Iran following their Wednesday call.

(Source: AXIOS)

The report mentions that the Biden administration acknowledges Israel's imminent major strike against Iran but is concerned that attacks on certain targets may escalate regional conflict significantly.

An Israeli senior official said that Israel's current plans are still more aggressive than what the White House hopes for.

However, a US official said after talking to Biden and Netanyahu, "We are moving in the right direction." Another US official said that after the call, the US government is less tense about Israel's plans.

Kinesis Money market analyst Carlo Alberto De Casa pointed out that the expected rate cut by the Federal Reserve and ongoing geopolitical tensions suggest that in the long run, gold may still maintain support.

Allegiance Gold's Chief Operating Officer Alex Ebkarian pointed out that escalating geopolitical events and strong demand led by central banks are another positive catalyst for gold.

How to trade gold?

FXtreet analyst Christian Borjon Valencia pointed out that after falling to a weekly low of 2603 USD/oz, the gold price is recovering from an uptrend. Despite the negative momentum of the past 6 trading days, but fromRelative Strength Index(RSILooking at it, the momentum turned slightly positive on Thursday. However, the gold price must break through the high of October 8th at $2653 per ounce for buyers to have hope of challenging the high of $2685 per ounce so far this year.

Valencia said that if the gold price effectively breaks through $2653 per ounce, the next resistance level will be in the $2670 per ounce area, followed by $2685 per ounce.

(Spot gold daily chart source: FXStreet)

On the other hand, Valencia added that conversely, if the gold price stays below $2650 per ounce, this could push the gold price lower towards $2600 per ounce in the future. Once it falls below that, the gold price will look to the 50-day SMA at $2540 per ounce.Simple Moving Average(SMA) $2540 per ounce.