Gold’s Upward Trajectory Amidst USD’s Correction and Geopolitical Tensions

In the early trading hours of the Asian market on Wednesday, the gold price (XAU/USD) maintained its ascendancy, hovering around the $1,925 mark. This positive momentum in gold is influenced by the US Dollar’s (USD) correction. Concurrently, the US Dollar Index (DXY) – a metric evaluating the USD’s worth against an array of international currencies – has slightly retreated, standing at 106.19. However, the growth in US Treasury yields might limit the USD’s decline.

On the previous day, official data from the US Census Bureau highlighted that US Retail Sales for September experienced a 0.7% MoM increase, surpassing the anticipated market projection of 0.3%.

The Retail Sales Control Group exhibited a growth of 0.6% MoM from its previous 0.2%. These figures underscore a robust consumption trajectory. In addition, US Industrial Production rose by 0.3% MoM, outpacing the market’s zero growth forecast. Significantly, Capacity Utilization advanced to 79.7, outstripping projections. The positive numbers momentarily boosted the Greenback, though the rise was ephemeral.

Neel Kashkari, President of the Minneapolis Federal Reserve Bank, expressed concerns on Tuesday about persistently high inflation rates, which have endured longer than initially predicted. While many Federal Reserve officials have held a dovish view, Philadelphia Fed’s President, Patrick Harker, emphasized the necessity of the central bank abstaining from inducing further economic strain by elevating borrowing costs.

Today, market analysts will be keenly observing statements from Federal Reserve speakers, including Waller, Williams, and Bowman. Their insights might offer significant direction regarding future monetary policy stances. The hawkish commentary could bolster the demand for the USD, potentially influencing USD-pegged commodities such as GOLD.

Moreover, the escalating geopolitical conflict between Israel and Hamas is under the spotlight. Reports from Gaza on Tuesday claimed an Israeli airstrike resulted in the deaths of 500 individuals in a hospital, a claim which Israel attributes to a Palestinian-initiated attack. The intensifying conflict could augment the appetite for traditional safe-haven assets like GOLD.

In the coming hours, market stakeholders will be anticipating the release of China’s third-quarter GDP figures, along with its Industrial Production and Retail Sales data. Any unfavourable outcomes might exert downward pressure on GOLD prices, considering China’s dominant role as the globe’s prime gold producer and consumer.

Gold Technical Analysis

Today, the GOLD price embarked on a significant uptrend, achieving the anticipated target of 1945.20.

There’s a potential to exceed this mark and aim for gains approaching 1977.25 in the near future. Hence, projections for an ongoing bullish trend are reinforced, especially with the backing of the EMA50 which consistently supports the price.

It’s imperative to note that any failure to surpass 1945.20 might induce a bearish recoil, propelling the price towards a retest of the 1913.15 mark. Today’s anticipated trading spectrum is bracketed between a 1920.00 support and a 1955.00 resistance level.