Gold XAU Testing the 200 Daily SMA At It Heads for $1,900
Gold had a great month in October, both in terms of gains as well as volatility. The steep sell-off at the end of September was forcefully r
Gold had a great month in October, both in terms of gains as well as volatility. The steep sell-off at the end of September was forcefully rejected by the second week of October, and Gold didn’t look back until the end of October. The geopolitical crisis in Israel was clearly a factor, but central bank activities may also have played a significant role, initially pushing it higher and now sending it back down again toward $1,900.Gold had a great month in October, both in terms of gains as well as volatility. The steep sell-off at the end of September was forcefully rejected by the second week of October, and Gold didn’t look back until the end of October. The geopolitical crisis in Israel was clearly a factor, but central bank activities may also have played a significant role, initially pushing it higher and now sending it back down again toward $1,900.
Gold prices began October on the defensive, having dropped below $1,850 per ounce at the end of September. But, the events in Israel on October 7 triggered a surge that sent the US dollar price back over US$2,000/oz on October 27. The monthly high was echoed in nearly all other major currencies.
Although as tensions remain within Gaza, the Gold price (XAU/USD) made a reversal after failing to hold gains above $2,00. XAU continues to decrease as upside risks from Middle East tensions diminish. The precious metal continues under pressure as market investors anticipate that hostilities between Israel and Palestine will be minimized. Along with receding Middle East hostilities, the Federal Reserve’s (Fed) concern over interest rate prospects has lowered gold’s attractiveness.
Investors were also waiting for Federal Reserve Chairman Jerome Powell’s comments on the December monetary policy meeting and the economy’s outlook. Fed Powell was projected to hold current interest rates higher for a longer length of time as cracks show in the US labor market, potentially limiting inflation forecasts.
But Jerome Powell issued another rate rise warning as inflation pressures remain elevated. That helped the USD further and weakened Gold, which fell below $1,940 on Friday, helped by US Treasury yields toward the end of the week, which reversed hgiher again. So, we will see if the 200 SMA breaks and if it does, we will go short on Gold again after closing several successful long term signals last week.
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