Gold Struggles to Crossover $1,670 – Quick Trade Plan

During early Monday morning in Europe, gold prices remained pushed around the intraday low of $1,652, maintaining the week-start fall from a fortnight high. As a result, the yellow metal GOLD justifies the stronger US dollar and the market’s cautious mood.

The US Dollar Index (DXY) gained 0.30% intraday to 112.25 by press time amid speculation of Japan’s intervention in the market to defend the yen and challenges to risk appetite. However, the news that North and South Korea exchanged warning shots near their disputed western maritime boundary on Monday appears to have helped US dollar purchasers recently.

Concerns that China’s President Xi Jinping will not hesitate to intensify geopolitical issues with the US over Taiwan may fall into the same category. The cause could be Jinping’s dominant performance at the annual Communist Party Congress after securing a third consecutive term.

XAU/USD

Furthermore, ABC News claimed Ukrainian General Oleksandr Syrskiy was claiming nuclear war worries, which may have recalled US currency purchases. The recent announcement by China of a COVID lockdown in the factory hub of Guangzhou has weighed on market sentiment and XAU/USD values. The recent increase in market bets on the Fed’s 75 basis point shift in November, from 88% to 95%, seems to have drowned out gold prices. Among these bets, the S&P 500 futures gained 0.50% intraday, while US 10-year Treasury rates hovered around 4.17%, extending Friday’s losses from a 14-year high.

Nevertheless, US equities had their highest weekly gains in four months in the most recent week, despite previously diminishing fears about the Fed’s fast rate hike. The gold market jumped sharply on Friday, marking the first weekly increase in three weeks as aggressive Fed expectations faded following a mixed Fed speech. “I want rates that put significant downward pressure on inflation,” St. Louis Fed President James Bullard said.

Similarly, Chicago Fed President Charles Evans suggests that rates must be raised further and held for some time. However, Nick Timiraos, Chief Economics Correspondent at The Wall Street Journal (WSJ), wrote that Federal Reserve officials are on track to raise interest rates by 75 basis points (bps) at their November meeting and will likely debate whether and how to signal plans to approve a smaller increase in December.

Gold dealers should expect greater weakness in the coming months due to volatile markets and challenges to the mood. The absence of Fed speakers and a probable hawkish decision from the European Central Bank (ECB) could pose a challenge to the gold downside.

Gold Technical Outlook

The gold price rallied strongly upwards to test the key resistance of $1,670 but failed to cross above this level. On the higher side, a bullish break above this level could have driven gold prices higher toward the $1,683 mark.

On the other hand, gold’s immediate support remains at $1,650 and a break below this can expose the gold price to $1,640. The RSI and MACD are supporting the bullish trend, so let’s keep an eye on the $1,650 level for a buy and $1,670 for a sell trade. Today’s trading range is likely to be between $1,650 and $1,675 support.

Today’s projected trend: Bullish above $1,650