Last Friday (October 20th), as the war between Israel and Hamas intensified, geopolitical uncertainty continued to support the safe haven appeal of gold. Spot gold briefly approached $2000 in intraday trading, but there was a rebound in the tail market, ultimately closing up only 0.36% higher at $1981.44 per ounce.
In the latest Fed update, Federal Reserve official Meister stated that if high yields continue, it will help ease economic activity. The data shows a slowdown in salary growth. The labor market is gentle and resilient. Reiterate its forecast to be consistent with the Federal Reserve's forecast of another rate hike. The risk of inflation prediction remains tilted upwards; It is expected to maintain high interest rates for a period of time. Federal Reserve Chairman Powell also stated in his speech at the New York Economic Club last week that sustained above trend economic growth or more signs of a slowdown in the labor market could put inflation at risk of re accelerating and give the Federal Reserve reason to further tighten monetary policy. However, Bank of America economists have adjusted their expectations for another 25 basis point rate hike by the Federal Reserve from November to December. Economists led by Michael Gapen have stated that even the forecast for a December rate hike is a dilemma, as there is a high risk that the Federal Reserve will either postpone the last rate hike until 2024 or not raise it again. The reason for the adjustment by the Bank of America is that none of the Fed officials (including Chairman Powell) who spoke last week gave strong reasons for the November rate hike. The strong economic data in September "holds the possibility of another rate hike", but there is a considerable possibility that the Federal Reserve has already completed the rate hike. Risks include weak inflation data, car workers' strikes, tightening financial conditions, possible government shutdowns, and soaring energy prices. If the Federal Reserve does not continue to raise interest rates for the rest of this year and there is no hope of easing the geopolitical conflict situation, gold is expected to remain in a favorable position.
Technically, the gold daily chart shows that the relative strength index (RSI) has risen above 70, indicating that gold has experienced a technical overbought situation for the first time since March. If there is a technical pullback in gold, $1960 per ounce (23.6% Fibonacci pullback in the latest upward trend) will become the first support level before $1930 to $1920 per ounce (200 day moving average and 100 day moving average). If the daily closing price of gold falls below the support range of $1930- $1920 per ounce, it may hit buyers and open the door for further decline to $1900 per ounce (38.2% Fibonacci retracement, psychological level). On the upward side, gold prices may face strong resistance at the psychological level of $2000 per ounce. If gold prices rise above this level, technology buyers may take action to push gold prices further up to $2020/ounce and $2040/ounce.
