Gold price reverses higher, key levels to watch

Gold price news, and analysis

• The US dollar braces for the US CPI report this week
• The gold price recovers some losses, what is next?

The upward trajectory of the US Dollar Index prices halted last week after reaching its highest levels in several months. Investors are now in a wait-and-see mode, anticipating the release of the US Consumer Price Index data on Thursday at 4:30 pm UAE time. The recent rise in dollar prices was influenced by signals that the Federal Reserve might consider a 25-basis point interest rate hike in the November session.

Markets are cautious and waiting for this data before making further assessments regarding the rate increase. It’s worth noting that the US jobs report for September, released at the end of last week, showcased continued resilience in the US labor market, with the economy adding 363 thousand jobs, surpassing the expected 170 thousand.

Projections suggest a decrease in the US core consumer price index from 4.3% in August to 4.1% in September and any lower-than-expected data would reduce the odds of an interest rate hike, resulting in a further decline in dollar prices and a rise in gold prices. Conversely, any higher-than- expected data will keep the door wide open for a rate hike in the Fed next meeting and potentially leading to a resurgence in the dollar and a decline in gold.

Gold Price Daily Chart

Chart source ADSS Platform

Last week, the gold price created three doji patterns in a row on the daily chart reflecting traders’ reluctance to press the price even lower. The market closed on Friday in the green for the first time in over a week as some traders took profit before the end of the session. This week, the market opened an upward gap due to further closing of short positions in the weekend. Currently, the price may be on the way for a test of 1872 and a daily close above that level signals a possible rally towards 1933. Nonetheless, the resistance level located at 1890 and 1911-16 should be considered.

On the other hand, a daily close below 1955 reflects the trader’s reluctance to rally the price further therefore, the gold may retreat towards 1812 and 1802 respectively although, the support level located at 1831 should be monitored. A further close below 1802 may encourage some traders to press towards 1765. That said, the support area residing at 1789-80 should be kept in focus.