As the market rallies, the interplay between global economic events and the US dollar's movement could be decisive in determining Gold's next major move. Gold has surged to all-time highs, supported by strong technical indicators and geopolitical tensions, but faces potential corrections amid a strengthening US dollar and upcoming inflation data. Traders should closely watch both the economic releases and technical levels as they navigate potential opportunities and risks in the market.
Overview
As the market rallies, the interplay between global economic events and the US dollar's movement could be decisive in determining Gold's next major move. Gold has surged to all-time highs, supported by strong technical indicators and geopolitical tensions, but faces potential corrections amid a strengthening US dollar and upcoming inflation data. Traders should closely watch both the economic releases and technical levels as they navigate potential opportunities and risks in the market.
Key Economic Events
Friday 02:50 am (GMT+3) - Japan: Retail Sales m/m (JPY)
Friday 04:30 am (GMT+3) - Australia: Retail Sales m/m (AUD)
Friday 09:45 am (GMT+3) - France: GDP q/q (EUR)
Friday 15:30 (GMT+3) - Canada: GDP m/m (CAD)
Friday 16:30 (GMT+3) - USA: Core PCE Price Index m/m (USD)
Saturday 04:00 am (GMT+3): China: Manufacturing PMI (CNY)
Technical Analysis
Gold prices have been on an upward trajectory, reaching new "uncharted territories" and recording all-time highs. Since August 5, the upward momentum has intensified, with prices emerging above the 50-period Exponential Moving Average and the 20-period Middle Band. Despite a few corrections, gold prices remain above the 20-period Simple Moving average, showing signs of strength. Both the Momentum oscillator and the Relative Strength Index (RSI) support the bullish bias for Gold. In particular, the Momentum oscillator registers values above the 100 baseline and the RSI above 50. A note of concern is that the Momentum oscillator indicates a negative divergence between the price and the oscillator, alerting for a potential correction to the downside.
Potential Upside Targets
If the bulls keep control of the market, traders may consider the following four potential upside targets:
2531.64: The first price target is seen at 2531.64, which aligns with the all-time high recorded on August 20.
2569.26: The second price target is determined at 2569.26, representing 161.8% Fibonacci Extension drawn from the swing high of 2569.26 down to the swing low of 2470.77.
2599.72: An additional resistance level is identified at 2599.72, corresponding to the weekly resistance (R3) calculated using the standard Pivot Points method.
2630.13: The fourth resistance is established at 2630.13, representing the 261.8% Fibonacci Extension drawn from the swing high of 2569.26 down to the swing low of 2470.77.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
2504.81: The initial level of support is identified at 2504.81, corresponding to the weekly Pivot Point (PP) calculated using the standard method.
2470.77: The second line of support is estimated at 2470.77, which aligns with the swing low marked on August 22.
2443.94 The third downside target is expected to be 2443.94, corresponding to the weekly support (S2) calculated using the standard method.
2418.34: An additional support level is estimated at 2418.34, representing an internal trendline.
Fundamentals
Gold prices slipped from last week's all-time high as a stronger US dollar made the precious metal more expensive for global buyers. The drop of more than 2% comes as investors rebalance portfolios at month-end, leading to a rise in the US dollar. Despite the dip, Gold remains above $2,500 an ounce, driven by rate-cut expectations and central bank buying. Traders are now focused on upcoming inflation data, which could influence future rate cuts. The recent surge in Gold, supported by haven demand amid geopolitical tensions, may take a pause as markets await further economic signals.
Conclusion
In conclusion, as Gold navigates near all-time highs, the balance between bullish momentum and the strengthening US dollar will be crucial in shaping its future direction. With key economic data on the horizon, traders must remain vigilant, closely monitoring both fundamental and technical signals to capitalize on emerging opportunities and mitigate potential risks.