#MiddleEast Situation##Gold Technical Analysis# 24K99 News On Thursday (October 31st), in the early European session, spot gold suddenly experienced a sharp short-term decline, with the price just breaking below the $2780 per ounce level; during the Asian session, the price briefly touched a record high of $2790.11 per ounce. FXStreet analyst Haresh Menghani wrote on Thursday, analyzing the technical trends of gold price.
(Source: 24K99) 15-minute chart for spot gold.
Menghani wrote that at the start of the European session on Thursday, the price of gold showed a downward trend. Expectations of a smaller rate cut by the Federal Reserve and concerns about the continuous expansion of the U.S. fiscal deficit continue to push up U.S. Treasury yields. This, in turn, helps the U.S. dollar to halt its corrective decline from earlier this week's three-month high and acts as a headwind to non-yielding gold in overbought conditions on the daily chart.
In addition, there was an important ceasefire message from the Middle East, which eased risk aversion and hit the gold price.
Lebanon's caretaker Prime Minister Najib Mikati stated on Wednesday local time that there is hope to announce a ceasefire agreement with Israel in the coming hours or days. Mikati is set to meet with U.S. special envoy Amos Hochstein on Thursday to discuss a ceasefire agreement between Israel and the Hezbollah in Lebanon.
Prior to his meeting with Hochstein, Mikati told Lebanon's Al Jadeed media that it was initially thought an agreement on a ceasefire would not be possible before the U.S. presidential election next Tuesday (November 5th), but after talking to Hochstein, he felt optimistic, making maximum efforts currently and holding an optimistic attitude towards reaching a ceasefire agreement in the next few hours or days.
The White House stated that U.S. envoy Brett McGurk will visit Israel with Hochstein on Thursday. A U.S. official mentioned that they will discuss a range of issues there, including Gaza, Lebanon, hostages, Iran, and broader regional issues.
The Israeli Public Broadcasting Corporation revealed a draft ceasefire agreement, stating that the ceasefire date is this Saturday, November 2nd.
Major Impact of USA PCE
Menghani stated that gold traders are eagerly awaiting the release of the USA PCE Price Index, before making new directional bets.
Peking time on Thursday at 20:30, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index for September, which is the Fed's favorite inflation indicator.
Authoritative media surveys show that the US PCE Price Index for September is expected to increase by 0.2% month-on-month and 2.1% year-on-year. The US September core PCE Price Index is expected to increase by 0.3% month-on-month and 2.6% year-on-year.
Analysts point out that if the US PCE inflation data, especially core indicators, fall short of expectations, the dollar may weaken, thus pushing up the price of gold. On the other hand, stronger than expected PCE data could undermine the price of gold.
In addition, at 20:30 on Thursday, Peking time, the US seasonally adjusted initial jobless claims for the week ending October 26th will be released, expected to be 0.23 million, compared to 0.227 million the previous week.
How to trade gold?
Menghani pointed out that from a technical perspective, the recent gold price has been moving upwards along a sloping channel from the August low, forming a stable short-term call trend. However, the Relative Strength Index (RSI) on the daily chart has already shown overbought conditions. Therefore, any subsequent uptrend is more likely to be limited near the $2800 per ounce level.
The mentioned level represents the top boundary of the channel, if decisively broken through, it will be viewed as a new trigger point by the bulls and lay the foundation for the continuation of the uptrend.
On the other hand, Menghani added that any meaningful corrective decline now seems to have found good support in the $2750-2748 per ounce area. Some subsequent selling pressure could easily push the gold price down to the resistance level of $2732-2730 per ounce, and then move towards the $2715 per ounce area.
The next resistance level for the gold price is at the $2700 per ounce level, if this level is broken, it will pave the way for the price to fall to the next significant support level near $2675 per ounce, and then further decline to the $2657-2655 per ounce area.
At 15:07 Beijing time, spot gold was trading at $2778.76 per ounce.
