Technical Analysis

Driven mainly by the US election and economic figures last week, the gold price pulled back from the newly formed record high. With the US election approaching, the gold market opened strong early last week. A better-than-expected US consumer confidence on Tue. led to a breakthrough of the previous high at 2758 (1), triggering a new round of S-T buying until it reached 2790 and the US 3Q GDP and ADP employment on Wed. However, the upward momentum reversed on Thursday after the core PCE inflation data, setting off a round of short-selling and profit-taking pushing gold prices back below the 2750-2758 resistance zone(3). Friday’s US employment data fell significantly below expectations, but the gold price still failed to close above 2758(3), the week ended at 2735.

Gold prices retreated from 2790 with significant profit-taking action reflected in the number of COMEX gold open interest on Oct. 31st. The profit-taking activities should persist early this week ahead of two major events (the US election and the Federal Reserve interest rate meeting). Unless there is a strong market reaction with a Trump victory or additional aggressive rate cuts from the US Fed. sparking a new round of S-T buying, it is unlikely that gold prices will reach over 2790 this week.

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1-hr chart (above) > Gold price broke the support line (2) last week, indicating a slowdown of the upward momentum. The selling pressure was relatively strong above 2758(3) as the price failed to clear the resistance zone(3) after the extremely weak US employment figures last Friday. Before the result of the US election and the US Fed., the S-T trading range is now set at 2710-2750 (4).

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Daily Chart (above) > The Gold price was rejected by the upper resistance of the uptrend channel (5) last week, followed by a single-day drop of over $40 last Thursday, an S-T reversal signal has appeared on the daily chart. Investors are waiting for the news to impact the market from the US election and the US Fed. meeting, the S-T trend should remain bearish for now. The first target on the daily chart is at 2715 (6) and the 20-day moving average (7).

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The gold price hit our S-T target of 2750 last week, reaching a new high of 2758. However, the upward momentum failed to last, and the price couldn’t hold above 2750, dropping back to the weekly low of 2708. Towards the end of the week, the gold market once again priced in the risk premium ahead of the weekend’s geopolitical uncertainties, pushing the price back to 2750, and closing the week at 2747.

Last week, several Federal Reserve officials made comments suggesting a ‘cautious approach to rate cuts,’ which strengthened the US dollar and put pressure on gold prices. On the other hand, the market had been grappling with potential retaliatory actions from Israel against Iran for the past two weeks, which finally materialized over the weekend. The attacks were relatively restrained, focusing solely on military sites in Iran and avoiding oil and nuclear facilities. Tehran, so far, has not issued an immediate response. With no significant casualties, the geopolitical tensions eased as markets opened on Monday. The NYMEX oil, most directly affected, gapped open 4% lower, and gold prices also opened $10 lower.

A few crucial US data releases are scheduled from Tuesday to Friday this week, including consumer confidence, third-quarter GDP, core PCE inflation, non-farm payrolls, and the unemployment rate. A lot of uncertainty fills the week, but… considering most of the US economic figures released in the past few weeks have been relatively strong, we can anticipate downward pressures on gold prices prior to the outcome of these figures. As the US election enters its final stages, regardless of the outcome, there is a strong likelihood that the gap between the two candidates will narrow before election day, potentially leading to safe-haven funds flowing into the gold market to support the price, offsetting the downward pressure from strong data.

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1-hr chart (above) > The price failed to hold above 2750 last week, causing the S-T trend to break below the upward support line (1). The upward momentum has begun to slow down, the support has shifted from the mid-week support line(2) to a slower pace(2.1) before the weekend. The key resistance zone is now sitting at last week’s high of 2750-2758 (4). If any US data falls short this week, the gold price may break above this resistance, triggering a new round of buying. However, before all those economic figures from the US, we can take advantage of the sideway range of 2710-50 (3) for S-T trading.

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日線圖 (上圖） > 整體格局未有太大改變，關鍵阻力在 2750(5)，而上升通道(6)仍然有效。

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Gold prices exceeded our expectations last week. They broke above the previous high of 2685 without any influence from major economic data or news, closing the week at a new high of 2722 before the weekend.

Early last week, gold prices continued to carry the upward momentum from the US inflation data from the previous week, jumping to the resistance at 2670. Although it was not a major market focus, weak US manufacturing data on Tuesday led to a technical breakout of the descending resistance line(1), triggering a round of buying that quickly pushed prices to the previous historical high of 2685.

After the ECB chopped the 0.5% rate and the release of US retail data on Thursday, the gold price cleared the resistance from the previous high of 2685, where the buying momentum carried on until Friday’s market close. As the Asian session opened on Monday, funds continued to flow in, so far no clear signs of a reversal yet.

Last week, the gold market shook off the influence of the US rate cut and the recent geopolitical factors, and the overall investment market is gradually being driven by the upcoming US election and its associated uncertainties. With the current market condition, “Trump trade” or not, the gold market, US stocks market, or cryptocurrencies, will be relatively bullish before the election date.

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1-hr chart (above) > The upward trend is still accelerating, shifting from last week’s trend line (3) to a faster pace at (3.1). With gold prices hitting new highs, there are no previous prices to use as references. In the S-T, watch out for the round number of 2750; and a 1:1 projection from the previous week’s high/low range (4), with a target around 2765 (4.1).

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Daily Chart > Gold prices broke through the key resistance at 2685 last week (5), reigniting the upward trend. The daily chart has not shown any reversal signals yet, so in the S-T, watch for resistance around 2750 near the upper resistance of the uptrend channel(6).

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Carrying the upward trend from the week before, gold prices hit a new high, pricing in the US Fed. additional 0.25% rate cut last week, in line with our expectations. The current uptrend started from 2550 after the meeting, and the upward momentum has finally slowed down after reaching a peak at 2685 on Thursday. The latest OI data from CME showed some slight profit-taking in the market before the weekend.

After the US Fed. meeting and China’s recent economic stimulation policies, the market is still in a kind of excited state. The CME fed. watch indicates that the probability of a 0.5% rate cut in November has increased from 48% at the end of last week to the latest 54% today. As long as the upcoming U.S. economic data in the next few weeks remains “normal,” and in line with market expectations. The gold market should behave the same as in late Aug. and early Sept. with a backdrop of the market speculating another 0.5% rate cut at the next Nov. meeting,

The focus this week is on Friday’s U.S. employment data. If the data exceeds expectations, gold may give us a deeper correction.

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1-hour Chart > Last week’s target of 2645-50, based on the sideway range 1:1 ratio(2), has been achieved, and the price continues to break higher. However, it is important to note that the upward trend began to slow down towards the end of last week, with the upward momentum slowing further from support line(3.1) to (3.2) and then to (3.3). The S-T operating range is between 2645-85(5) for now. The key support level is at 2645 (4), and if this level is breached towards the end of this week, the operating range will shift down to 2600-2645.

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Daily Chart > 2685 appears to be the current top. Temporarily takes the high and low of last Thu. and Fri.(7) as a trading reference(7). If the price breaks below 2645, the support line (6) and the 20-day MA should be the downside target in the coming two weeks.

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The uptrend has restarted since the gold prices broke out from the range of 2480-2530(1) two weeks ago. There was some S-T profit-taking after the US Fed announcement, however, the prices managed to clear the S-T resistance(3) before the weekend, hitting a new all-time high.

Before the US Fed. meeting, the market was merely expecting a 25 basis points cut, and the extra 25 basis points cut surprised everyone. Now the market needs additional time to price in this new factor, so gold prices are likely to keep going up in the S-T. Recently, people are more focused on how the U.S. economy is doing rather than inflation figures. This week, keep an eye on the U.S. 2Q GDP report coming out on Thursday. The PCE inflation data on Friday might not have a very big impact on gold prices.

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1-hr Chart(above) > Gold prices have been running in an uptrend channel(2) in the past two weeks. While the price is hanging around its recent highs, there are no previous supports or resistances to reference from. However, remember the gold has been trading sideways between 2472-2530(4) in early September. Seems that each break-out is running the same range, around 56 dollars. After surpassing (4.1) last Friday, the first target for this week could be set at approximately 2646-50 (4.2), 1:1 ratio.

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Daily Chart(above) > The upward momentum of gold prices is accelerating, and the upward support has shifted from (5) to (5.1). There is no obvious reversal signal on the daily chart, the buy-low strategy continues.

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Spot gold price has remained sideway in the past 2 weeks, with both the PCE price index and US employment data failing to bring new momentum to the market. The OI data from CME’s gold futures has stayed at around 510k for a while now, showing no significant changes in the numbers of long/short positions. This week’s focus is on Wednesday’s U.S. inflation data, no matter if it is good or bad, the market reaction should be like those major figures released previously. A week from the US interest rate meeting, it’s not easy for gold to escape the current range without any new stimulus. The market should give us more chances this week to take advantage of the sideways market. Just need to be cautious towards the end of this week, when the market may start to price-in further the US Fed. cut next week, leading to an early breakthrough.

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1-hr chart > Continue to operate in the 2480-2520(1) range until the price escape.

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Daily chart > The uptrend channel (2) is still dominating the gold market in M-T. S-T range remains in 2480-2530(3). If the price falls below 2480 before/after the Fed. meeting, a major consolidation will begin. a

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Gold price carried forward the upward momentum from the breaking of 2480 in the previous week, hitting a fresh record high of 2531 early last week. But the buying has reversed after the Fed. Meeting minutes were released during the US session on Wednesday. The price fell to the lowest of the week at 2470, and the week ended at 2510. There was no important US economic data last week, and Powell’s speech scheduled on Friday has controlled the market’s overall movement during the week. Although the final remarks were dovish, the market had already priced in the 0.25% rate cut in September, and in the absence of any new progress failed to stimulate the gold price to rise higher. In the next two weeks until the Fed meeting in mid-September, unless those economic figures during this period can drive the market to speculate on the half-percent interest rate cut in September, the rate-cutting factor will no longer be able to push up the gold price significantly in the short term. This week, pay attention to the US 2Q GDP on Thursday and the PCE price indexes on Friday.

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1-hour chart(above) > The upward trend has slowed down to (1.1) after the gold price escaped channel(1). The current S-T resistance is at 2520-30(2). The range bound of 2480-2510 3) can be used as the operating range at the beginning of this week, until the next breakout

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Daily Chart(above) > It will be the first sign for gold prices to break upward if it one day closes above 2513 on the daily chart. 2480 is the key support at the downside.

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The spot gold price went up during the week but fell after Friday’s US non-farm payroll report. Looking back at last week, the price broke through the 2400 resistance before the Fed—meeting on Wed. The price kept on rising after Powell’s dovish speech, and tensions rose in the Middle East as Iran’s leader ordered attacks on Israel in response to the assassination of a Hamas leader. The US released weaker-than-expected job data on Fri., causing gold prices to hit a weekly high and rechallenge the historical peak 2480. However, the market quickly focused on concerns that the US economy might enter a recession. US stocks rapidly fell from their highs, dragging gold prices down to a daily low of 2410, closing the week at 2442.

According to CME FedWatch, the latest interest rate futures indicate that the probability of a 50 basis point rate cut in September increased from 22% on Thursday to 95% early in the Monday Asian session. Whether in the gold or stock markets, a rate cut should boost the market. However, despite reaching twice above 2450 in the past month, the spot gold price didn’t have any significant new long-buying position above 2450 but profit-taking and new short-selling positions. The market now broadly expects the first rate cut to happen in September. As the first rate cut approaches, it is almost time for investors who entered long for the ‘rate cut’ concept at the beginning of the year to plan their exit. ‘Buy on the rumour, sell on the news’ ~ gold prices may still hit a new high before September, but expect a significant correction around the first rate cut!

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1-hour Chart > The price still runs within the upward wedge(2). In the S-T, gold prices are supported by the trendline(2.1). If this support is broken, a significant correction may occur, with a target of 2400. Currently, the range of 2450-53 is acting as an S-T resistance zone, while stronger resistance is expected at 2478-80.

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Daily Chart > No major economic data are expected to be released this week, and gold prices are unlikely to break high. The initial expectation is to work within the range of 2410-80 established last Friday.

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Entering a consolidation cycle after gold failed to stay above 2450.
Gold price broke through the previous historical high of 2450(1) early last week on Tuesday, triggering a round of buying and rising to a weekly high of 2483 within 24 hours. However, the upward momentum failed to carry on at a high level. According to the market data from CME, gold futures showed significant new short positions entering the market on Wednesday. Short-selling accelerated after the U.S. released manufacturing data on Thursday, when the price fell below the key support of 2450(2), and the market closed near 2400 before the weekend. After the false break above 2450, it will be hard for gold to return back above 2450 in the near term without any consolidation. This week, focus on Thursday and Friday’s U.S. GDP and the core inflation data.

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1-hr chart > Gold price supports the previous week’s low of 2390-2400. Before the next move, take advantage of the 2391-2440(3) range early this week. If the gold price breaks below 2385(4), the downside target will be 2350(5).

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Daily chart > The decline in gold prices is accelerating, with a single-day drop of more than $40 on Friday. The short-term support is at 2400(7), and the lower target can grasp the 20-day moving average.

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Weekly chart > Gold prices are on a L-T upward trend that originated from 2018. Last week’s peak has created a reversal signal on the chart (10). The target below can now be aimed at the bottom of the range 2300 (11).

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The gold price was stimulated by the easing inflation data from the US last week, breaking through the post-non-farm resistance of 2391(2) and touching a four-week high of 2424. Referring to CME gold futures’ data, the total number of Open Interest last Friday reached the highest level of 540k contracts, which is above the 530k contracts at the time of the record high of 2450 in May, a bullish sign as more funds are now attracted by the gold market. Not many important economic figures are scheduled to be released this week. Let’s see if the price can stay above 2391 this week. The longer the price remains at around 2400, the more investors will be ready for a new high.

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1-hr Chart > The price of gold is still running in the ascending channel (1), originating from the end of June. After breaking through the resistance (2) last Thur, the high and low in the past 48 hours have formed a side-way channel (3). Without any critical economic data this week, we can take advantage of the 2319-2425(3) range at the beginning of this week. It must be noted that a new round of selling will trigger if the price clears the support of 2391(2), and the downside target can be set around 2358-60(4).

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Daily Chart > The range of 2277-2431(7) now dominates as the price trades above 2380. The Cup & Handle (6) pattern is yet to be confirmed. If the gold price can clear the resistance (6) in the next two weeks, a new round of M-T buying will begin.

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