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Gold price presently engaged in a consolidation phase. Reflecting the losses sustained earlier in the current week, specifically during the trading session on Tuesday. This state of consolidation can attributed to the prevailing ambiguity in the trajectory of the United States Dollar (USD). Owing to contradictory pronouncements from the US Federal Reserve (Fed), a prudent risk sentiment prevailing in the market. Also the recent decline in US Treasury bond yields.
The price of gold has formally confirmed its breakdown from an ascending triangle pattern subsequent to a closure below the support offered by the ascending trendline. Which established at the level of $1,978 on Tuesday.
Gold Price : Key Support and Resistance Levels in Focus
The immediate support level now resides at the 21-day Simple Moving Average (SMA). A notable bullish indicator, currently situated at $1,961. Should there be a daily close below this threshold, it is anticipated to incite a fresh downtrend towards the psychologically significant level of $1,950. Prior to reaching this level, buyers of gold may encounter a steadfast support level at $1,963.
Notwithstanding, it is worth noting that the 14-day Relative Strength Index (RSI) indicator retains its position above the 50 level. Signifying the potential emergence of buying interest in the gold market at lower price levels.
Also Read: Gold Price Today Lingers Below $1,990, Evoking Puzzlement
For a meaningful resurgence in the gold market, prospective buyers compelled to execute a sustained breakthrough above the resistance line. Which previously functioned as support for the triangular pattern, situated at $1,984. Beyond this juncture, buyers will face resistance at the high achieved on Monday, marked at $1,993.
The following consequential resistance level envisioned at the threshold of $2,000.
Source: FX Street
Market Caution Amidst Asian Traders: China’s Economic Concerns and Fed Uncertainty
Asian traders have adopted a cautious stance, despite the positive performance on Wall Street. This caution driven by concerns about China’s economic slowdown and the recent decline in the US bond market. There’s also some uncertainty regarding the Federal Reserve’s interest rate policies, particularly following mixed messages from Fed policymakers on Tuesday.
For instance, Chicago Fed President Austan Goolsbee has stated that the central bank is now focused on determining how long to maintain current interest rates if economic progress continues. Meanwhile, Minneapolis Fed Bank President Neel Kashkari has taken a more hawkish position. Suggesting the Fed may need to take additional measures to control inflation. Fed Governor Michelle Bowman has indicated the likelihood of further short-term rate increases.
The robust third-quarter US economic growth has attracted significant attention and is a key consideration for the Fed’s future policy decisions. As noted by Fed Governor Christopher Waller.
Investors are eagerly awaiting comments from Fed Chair Jerome Powell. Who plan to speak at a conference on November 8, 2023, celebrating the centennial of the Division of Research and Statistics. Powell’s appearance on Thursday expected to carry greater significance. As he is set to participate in a policy panel discussion on “Monetary Policy Challenges In A Global Economy” at the 24th Jacques Polak Annual Research Conference.
US Dollar’s Influence on Gold Prices
Looking ahead, the US Dollar is likely to gain support due to the uncertainty surrounding Jerome Powell’s upcoming speech. Which could put Gold buyers in a defensive position. However, if there’s a resumption of the correction in US Treasury bond yields, this may offer a temporary relief to the Gold price, which has experienced two consecutive days of losses.
In summary, statements from Fed officials and movements in the US bond market will continue to be pivotal factors shaping the dynamics of the Gold price.
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