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Gold Price Analysis: XAU/USD Stays Resilient Amid Favorable US Economic Data

Posted Friday, October 27, 2023 by
Arslan Butt • 2 min read

During the early hours of Friday’s Asian trading, GOLD (XAU/USD) maintained its upward trajectory for the third day in succession. This positive trend is buoyed by declining US Treasury bond yields, with the current gold price marking a 0.15% daily increase and positioning at $1,987.

The US Bureau of Economic Analysis recently disclosed that the preliminary US GDP for Q3 registered a growth of 4.9%, a surge from the previous 2.1%. This growth rate surpassed the anticipated market projection of 4.2%. Additionally, US durable goods orders for September reported a 4.7% month-on-month rise, contrasting the 0.1% dip in August and exceeding the 1.5% forecast. The weekly Initial Jobless Claims for the week ending October 21 observed a slight increase to 210K, whereas the continuing claims saw a 63,000 rise, marking the peak since May.

Contrary to the speculation around the bond yields indicating a potential recession, US Treasury Secretary Janet Yellen affirmed that the uptick in bond yields mirrors the robustness of the US economy rather than any fiscal deficits. Yet, the US Treasury bond yields witnessed a dip on Friday, with the 10-year bond yield settling at 4.86%, having pulled back from 5.00%. This yield shift played a role in propelling gold prices, even against the backdrop of encouraging US economic indicators.

Market participants will be keenly observing the forthcoming US Core PCE for September. Forecasts suggest a monthly and yearly increment of 0.3% and 3.7%, respectively. Additionally, data on US Consumer Inflation Expectation and the Michigan Consumer Sentiment Index for October is slated for release. The forthcoming Federal Open Market Committee (FOMC) gathering next week will be of significant interest.

Technical Analysis of Gold (XAU/USD):

GOLD prices are exhibiting renewed upward momentum, distancing themselves from the 1977.25 benchmark, which solidifies the projection for a sustained bullish trajectory throughout the day. We anticipate target levels starting at 2000.00 and extending up to 2016.90.

The 50-day Exponential Moving Average (EMA50) consistently supports this expected rise in prices, which is strengthened by the bullish flag pattern seen on the chart. It’s crucial to underscore the importance of maintaining levels above 1977.25 to realize the projected milestones.

For today, we forecast a trading spectrum with a support level of 1975.00 and resistance level at 2005.00.

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