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Asset Watch
Tuesday, October 17, 2023
The gold price saw an upswing at the close of the previous week following the release of US inflation figures, which were largely in line with expectations. The core Consumer Price Index (CPI) YoY met expectations at 4.1%, while the headline CPI YoY exceeded predictions slightly, reaching 3.7% compared to the expected 3.6%. This increase was attributed to higher energy prices. Consequently, the likelihood of the Federal Reserve raising interest rates at the November meeting decreased, resulting in a decline in US dollar prices and a boost in gold prices.
Crucial speeches by Federal Reserve members, particularly Mr. Powell, Chairman of the Open Market Committee, remain influential factors that could affect precious metal prices. Any hints of a potential delay in an interest rate hike in the November meeting may drive gold prices higher and vice versa.
At the same time, the markets were moderately affected by simmering geopolitical tensions in the Middle East. Investors sought refuge in safe-haven assets, with gold being a prominent choice. This surge in demand caused gold prices to rise significantly on Friday, offsetting most of the losses from previous weeks. Presently, gold prices have stabilized, likely due to reports suggesting that US President Joe Biden is planning a visit to the Middle East to mitigate geopolitical tensions and prevent further escalation in the region.
Chart source ADSS Platform
On October 13th, the gold price surged above the bearish trendline that originated from the July 20 high. This breakthrough, as long as the prices remain above this trendline, opens the possibility to test the $2000/oz mark and potentially rally towards 2025 in the mid-term. A daily close above $1933 indicates a robust bullish momentum, potentially propelling the price for a short-term test of the resistance area in the range of $1974-1981. However, it’s important to monitor the resistance levels at $1949 and $1960 as well.
Conversely, any failure to stay above the aforementioned bearish trendline suggests a weakening bullish sentiment. A daily close below $1911 could embolden bearish tendencies, pushing towards the support area between $1965-$1955. Nonetheless, it’s essential to keep a close eye on the support level at $1890.
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