Remaining Long on Gold as it Remains Supported by MAs

Gold made some massive gains in October, which brought the price above the major round level of $2,000. But XAU turned negative in the first 10 days of this month. The apparent explanation for the surge in October was geopolitical issues in the Middle East, while this month Gold retreated lower as tensions in the area did not expand further. However, after yesterday’s inflation report from the US, the attitude has shifted and buyers are back in control.

As tensions in Gaza persist but do not spread further in the Middle East, the Gold price (XAU/USD) has reversed after failing to hold advances over $2,000. With the upside risks from Middle East tensions subsiding, XAU continued to decrease and fell to $1.932 last week.

Although the USD is starting to show signs of weakness, which benefits other assets such as Gold. XAU has been bullish this week and it climbed to $1,975 yesterday, ahead of the US retail sales report which beat expectations in October with core sales increasing by 0.1% while expectations were for a -0.1% decline.

So, GOLD traders are beginning to believe that inflation is really falling to normal levels all over the world and the world’s central banks can sleep better now. Markets are beginning to anticipate interest rate cuts from central banks, maybe in the first part of next year, which benefits safe havens such as Gold, as most currencies are expected to weaken.

The 100 SMA (green) was also acting as resistance on the H4 chart, which is now an obstacle to overcome by buyers. Although the retreat stopped right at the 50 SMA (yellow) which is now acting as support on this timeframe. This is a bullish sign as moving averages are turning from resistance into support, so we decided to open a buy Gold signal on Tuesday evening.

Gold XAU Live Chart