In the backdrop of lackluster Chinese economic data and a relaxation in geopolitical tensions, Gold faced headwinds throughout the week. Notably, a robust support base appears to have solidified within the $1,925–$1,930 range. The upcoming release of US October inflation data looms as a potential catalyst, poised to instigate significant movements in the XAU/USD market.
Market Impact Amid Geopolitical Developments and Economic Indicators
Last week, the US Dollar faced substantial losses due to the Federal Reserve’s cautious policy stance and disappointing October jobs data. Although the USD managed to recover some losses on Monday in the absence of significant drivers, it led to a decline in XAU/USD.
Israeli Prime Minister Benjamin Netanyahu stated in an ABC News interview that Israel won’t agree to a general ceasefire until all hostages are released by Hamas. However, he expressed openness to “short pauses.” The UN Security Council failed to reach an agreement on a resolution, but the conflict remained confined to the Gaza Strip, alleviating fears of a broader crisis and limiting safe-haven demand for Gold.
On Wednesday, the 10-year US Treasury bond yield dropped to 4.5%, impacting the USD’s performance. XAU/USD faced downward pressure as well. China’s trade surplus narrowed to $56.5 billion in October, missing estimates and further weighing on Gold.
Thursday’s report from China’s National Bureau of Statistics showed a 0.1% monthly decline in the Consumer Price Index for October, raising concerns about consumer activity and hindering Gold’s recovery.
The US Department of Labor reported a slight decrease in first-time unemployment benefit applications to 217,000. Fed Chairman Jerome Powell, speaking at an IMF panel, reiterated the Fed’s data-dependent approach. Powell’s comment on the lack of confidence in achieving a “sufficiently restrictive” policy stance triggered a rally in US bond yields, preventing Gold from reversing its weekly decline.
Technical Indicator of Gold (XAUUSD)
At the beginning of the week, the Relative Strength Index depicted market momentum positioned in the center of the indicator, indicating a state of equilibrium. However, as the week progressed, Gold prices gained momentum towards the weekend, aiming for the $2,000 price threshold. The support level solidified at $1928, while resistance formed at the $2,000 mark, causing the Bollinger Bands to illustrate a horizontal price channel. This emerging market trend may exert pressure on the resistance level, creating the potential for the market to breach the $2,000 price milestone.
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