Gold Price Analysis: Key Factors Influencing XAU/USD Dynamics and Technical Outlook

In the Asian trading session on Thursday, Gold price (XAU/USD) experienced a slight uptrend, yet failed to consistently surpass the signific

Written by: Arslan Butt • Thursday, November 2, 2023 • 2 min read

In the Asian trading session on Thursday, GOLD price (XAU/USD) experienced a slight uptrend, yet failed to consistently surpass the significant $2,000 benchmark. The prevailing positive risk sentiment is identified as the primary constraint for the metal’s upward movement. Nonetheless, the commodity remains positioned above the recent low of approximately $1,970-1,969, suggesting caution for those anticipating a sharp decline.

Declining US Treasury bond yields and the US Dollar’s weakening trajectory, in anticipation that the Federal Reserve may have concluded its rate hikes, offer some stability to Gold’s non-yielding value. Additionally, the rising tensions in the Israel-Hamas situation and deteriorating economic circumstances in China act as buffers against a substantial decline for the haven asset, XAU/USD.

Despite a modest intraday gain, Gold struggles to make significant headway due to the prevailing risk appetite and ambiguity surrounding the Federal Reserve’s rate adjustment plans. After maintaining overnight interest rates unchanged for two consecutive instances, the Federal Reserve indicated that the current financial conditions might sufficiently address inflation concerns.

Consequently, market projections now align with a potential rate cut by the US central bank in June 2024. This anticipation further pressures US Treasury bond yields and weakens the US Dollar. Notably, the yield for the rate-sensitive two-year US government bond has dropped to its nadir since September 8, while the primary 10-year Treasury yield retracts from the 5% mark. The Federal Reserve has enhanced its economic outlook, recognizing the US economy’s unforeseen robustness, thereby leaving room for potential rate hikes.

In terms of geopolitics, Bolivia has severed its diplomatic relationship with Israel, citing civilian casualties due to what it perceives as excessive military actions in Gaza. Attention now turns to the upcoming US employment data – the NFP report – scheduled for Friday, anticipated to offer substantial direction to Gold.

Gold Technical Insights

For the bull market to regain dominance, Gold prices must consistently breach the $2,000 threshold. Technically, this figure represents a formidable resistance, succeeded by a prolonged peak in the vicinity of $2,008-2,010. A clear surpassing of this range might propel GOLD towards the subsequent resistance near $2,022.

Conversely, the recent low of approximately $1,970 is perceived as an immediate support for XAU/USD. Extended downward movement could test the $1,964 intermediary support, preceding a potential decline towards the $1,954-1,953 bracket.

Gold Live Chart

GOLD

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.