#GoldTechnical Analysis#24K99 News: During the Asian market session on Friday (October 11th), spot gold suddenly surged significantly in the short term, with the price just breaking through $2645 per ounce, rising more than $15 within the day. FXStreet Senior Analyst Dhwani Mehta wrote on Friday, analyzing the technical trend of gold price.
(Source: 24K99) 15-minute chart for spot gold.
Mehta wrote that on Friday morning, the price of gold continued its rebound from the three-week low of $2604 per ounce. Broad risk aversion sentiment and a moderate decline in the US Producer Price Index (PPI) supported gold prices before the release of data later on Friday.
Mehta pointed out that the gold price has reclaimed the key 21-day moving average and may further rebound in the future.
On Thursday night local time, the Israeli Security Cabinet will hold a meeting to decide how to respond to Iran's large-scale missile attack on Israel on the 1st of this month.
Israeli Security Cabinet member and Minister of Science Gila Gamliel said the Security Cabinet will "make the right decisions" to prevent Iran from attacking again.
Gamliel told Israel's public broadcasting company Kan that retaliatory actions are like a ready arrow, ready to be launched at any moment.
According to the US media Axios, three American and Israeli officials told Axios that US President Biden and Israeli Prime Minister Netanyahu came closer to an agreement on Wednesday in a phone call, regarding Israel's plans for retaliating against Iran. The Biden administration acknowledges that Israel will soon launch a significant attack on Iran.
After the US released the latest economic data on Thursday, traders increased their bets on the Federal Reserve cutting interest rates by 25 basis points in November, causing a sharp rise in gold prices on the same day.
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%.
Another set of data showed 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. 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 increased from 0.225 million the previous week to 0.258 million, exceeding the estimated 0.23 million.
According to CME's "FedWatch" tool, the market currently expects an 80% chance of the Federal Reserve cutting interest rates by 25 basis points next month, up from 76% before the release of the aforementioned economic data. Because gold does not yield interest, it becomes the preferred investment in a rate-cutting environment.
On Thursday, spot gold closed up $22.13, a 0.85% increase, at $2629.84 per ounce.
Focus on USA PPI data.
Mehta pointed out that the dovish sentiment around the expected Fed rate cut may face a test with the release of the USA PPI report, which will have a significant impact on the dollar and gold prices.
The year-on-year growth rate of USA PPI in September is expected to slow down to 1.6%; while the year-on-year growth rate of core PPI in September is expected to rise to 2.7%, higher than the previous 2.4% increase in September.
Mehta added that the optimistic sentiment towards China's fiscal stimulus package to be launched on Saturday could continue to support gold prices.
The Latest Technical Analysis of Gold
Mehta wrote that buyers refused to back down on Thursday, even as gold prices closed at a crucial 21-daySimple Moving Average(SMA)ResistanceAfter falling below $2619 per ounce, it re-enters the game.
Gold price closed above the 21-day moving average support turned resistance level on Thursday (currently at $2628 per ounce), thus resuming the upward trend.
14thRelative Strength Index(RSIRising above 50 indicates there is more upside potential.
Mehta stated that the next call targets for the gold price are at the psychological barrier of $2,650 per ounce and near the high point of $2,670 per ounce.
(Spot gold daily chart source: FXStreet)
On the downside, Mehta added that the recent support for the gold price is seen near the three-week low of $2,600 per ounce. If the gold price continues to drop below this level, it may extend the decline towards the low point on September 20th at $2,585 per ounce.
If gold further declines, the price may challenge the area of $2,550 per ounce, where the 50-day moving average is located.
At 11:51 Beijing time, spot gold is reported at $2,645.37 per ounce.
