Due to the heightened tension and increased demand for safe haven after the Hamas attack on Israel, gold prices rose before the US market on Monday (October 9th). As of press release, spot gold has risen by over 1%, reaching a daily high of 1855.60 and currently trading at $1949.77 per ounce. Despite the surge in US employment in September, which provided a basis for further interest rate hikes, gold prices continued to rise on Monday. It is worth noting that over the weekend, Federal Reserve Governor Bowman stated that inflation in the United States is still too high and added that further tightening of monetary policy may be necessary. Higher interest rates are usually detrimental to gold prices. The inflation data released later this week may pave the way for another interest rate hike in the United States this year, weakening the attractiveness of gold. Investors are also paying attention to the September meeting minutes of the Federal Reserve scheduled for release on Wednesday. The key question is, if this weekend brings some structural changes to the geopolitical landscape, how long can the flow of these safe haven funds last?
This week, in addition to closely monitoring the Israeli-Palestinian conflict, we also need to pay attention to US CPI inflation data and the minutes of the Federal Reserve meeting. Gold prices rose more than 1% on Monday as the military conflict between the Israeli military and the Palestinian Islamic organization Hamas intensified political uncertainty in the Middle East, prompting safe haven buying in investment products such as gold. The financial market is preparing to face the headwinds and fluctuations brought about by the explosive attacks of armed militants in Gaza, as the conflict may exacerbate tensions in the Middle East and lead to soaring oil prices. The region has nearly one-third of the global supply. The Japanese yen and the US dollar, two safe haven currencies, also strengthened. Although the sudden crisis in Israel resulted in a small premium for gold, only when the situation in the entire region significantly escalates will there be a greater increase in gold. Gold prices began to rebound last Friday, approaching their lowest level since March last week, when they were influenced by signals from the Federal Reserve that they would maintain tight monetary policy. Monday's rise in gold prices coincided with a significant increase in employment in the United States in September, providing a reason for another rate hike. Last weekend, Federal Reserve Governor Michelle Bowman stated that the inflation rate in the United States is still too high and added that further tightening of monetary policy may be necessary. Higher interest rates are usually detrimental to gold.
Technical analysis of gold: From a technical perspective, the daily cycle closed positive at the bottom, confirming that this wave of bearish declines has bottomed out. However, there is currently a high jump window and there may be technical fixes in the future. Therefore, although firmly bullish for the time being, it also depends on whether this wave of bulls is directly rising or whether they need to repair the gap before rising again. If it is an absolute strong direct upward trend, then it is impossible to repair the window in the case of a continuous positive daily trend within the week, as shown in 18801912 above. If it is a slow surge, there may be room for a rebound and repair. The geopolitical situation is an unstable factor. If it continues to ferment and conflicts escalate, gold hedging may once again heat up, and there may be room for another surge. The possibility of reaching a level above October 1980 cannot be ruled out. During the week, we will focus on the minutes of the Federal Reserve meeting and CPI data, which will be important indicators reflecting the trend of the US dollar. Therefore, we also need to pay attention to its specific impact.
Combined with the correction of rebound in technical formation, the daily line has slightly stopped falling and started to stabilize. The rebound wave shape of the falling wave shape was treated with a rebound or oscillation mentality at the beginning of the week, at least breaking the previous extremely weak unilateral decline pattern. First, switch to a fluctuating mindset and then choose a new direction. The 4-hour chart shows a wave of short jumps and high openings, combined with a technical rebound to stop the decline. At the beginning of the week, we initially relied on the 1830 defense to fall back and see the rebound first. As for the strength and size of the rebound, it depends on the intraday shape. The first support point is in the 1835 area, which is also the position to fill the gap. At the beginning of this week, gold was still expected to continue its upward trend, but due to a high opening, there was some room for early gains. Therefore, it is best not to pursue a long trend, but to wait for a moderate correction before considering more.
The upper short-term focus is on the resistance of the 1883-1880 line, while the lower short-term focus is on the support of the 1850-1853 line.
On Monday (October 9th), US crude oil fell slightly after jumping short and opening high, jumping more than 4% at one point, reaching a three-day high of $86.45 per barrel. On the one hand, it was the impact of another large-scale conflict between Palestine and Israel, and on the other hand, there was a rebound in demand after last week's oil price drop of over 8%. It should be noted that if the Palestinian-Israeli conflict worsens further, oil prices are expected to reverse last week's decline, with short-term focus on resistance around the 21-day moving average of 89.04. Analysts pointed out that the global economy will no longer be affected by the Arab oil embargo, which will lead to a threefold increase in crude oil prices. However, underestimating the possibility of the world facing longer periods of high oil prices would be a mistake. If oil prices skyrocket due to Middle East tensions, the White House will definitely use SPR. Although oil reserves are at their lowest level in 40 years, there is still enough oil reserves to cope with another crisis. On the one hand, production cuts in Saudi Arabia, Russia, and other countries are still ongoing, and the supply side is still relatively tight. Crude oil inventories are at historical lows, and supply side turmoil may trigger a shift in market sentiment at any time. On the other hand, investors' concerns about demand have significantly increased during the high oil price stage. In the past week, EIA data has provided very poor gasoline data, and not only has gasoline demand in the United States decreased significantly, but inventory has also accumulated significantly.
Last week, crude oil closed on the big negative line, but this week, due to the influence of the news, it jumped short and opened high to recover some lost ground. From the structure of the weekly K-line, last week's big negative line combined with the cross K-line, forming a downward pregnancy line. However, this week's high opening has disrupted the pattern, and it remains to be seen whether it will continue to decline after rebounding and correcting, or whether it will forcefully recover lost ground. Pay attention to the pattern shift this week. The depth of the subsequent impact on the message surface also needs to be observed. The 4-hour chart had previously experienced a wave of weak unilateral decline, but this week it broke the weak pattern by jumping short and opening high, and regained its position on the medium track. At present, there is a slight room for rebound correction, so pay attention to the sustainability of the Asian and European markets, whether to further rebound and recover or to turn down again after correction. Short term waiting for further confirmation of the form, the Asian market will wait and see first, and the time point will be stuck behind the European market. The upper short-term focus is on 87.8-88.0 line resistance, while the lower short-term focus is on 85.0-85.3 line support.
