Gold Backs Off after its Best Week since March
XAU/USD Analysis
Hamas launched a surprise and deadly attack on Israel on Saturday October 7 and the country retaliated, with Prime Minister Netanyahu pledging "a crushing victory" over the Palestinian militant organization [1]. The events created risk aversion and Gold attracted safe-haven flows.
The precious metal also benefited from soft Fed rhetoric, since some voters diverged from the hawkish bias of the last policy decision. Ms Logan for example, recently said that there "may be less need to raise the fed funds rate" due to the elevated long-term bond yields [2]. Mr Kashkari doubled down, saying "it's certainly possible that higher long-term yields may do some of the work for us in terms of bringing inflation back down".[3]
As a result, XAU/USD registered its best week since March. It has moved above the EMA200 (black line) and the July highs (1.987) are now in its eyesight, but we are a still cautious around sustained strength.
However, the commodity shows caution this week, as fears around the Middle East situation appear to be somewhat subdued. Israel intends to move into the Gaza Strip, but that has not yet happened. Iran has denied any role in the attacks [4] and the US has not found any direct involvement so far [5] and a spillover is so far prevented.
There is scope for a XAU/USD return back below the EMA200 (at around 1,990), which would shift immediate bias to the downside again, but 1,804 will require a strong catalyst. The next leg of the move will be determined by today's releases from the US and Mr Powell's speech on Thursday, to see if he will reaffirm the higher-for-longer narrative, or lean more dovish as some officials recently did.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 17 Oct 2023 https://www.gov.il/en/departments/news/ironswords1016202375 | |
| Retrieved 17 Oct 2023 https://www.dallasfed.org/news/speeches/logan/2023/lkl231009 | |
| Retrieved 17 Oct 2023 https://www.youtube.com/watch | |
| Retrieved 17 Oct 2023 https://newyork.mfa.ir/portal/NewsView/731039/The-Position-of-the-Islamic-Republic-of-Iran-Regarding-the-Ongoing-Situation-in-the-Occupied-Palestine | |
| Retrieved 15 Apr 2026 https://www.state.gov/secretary-antony-j-blinken-with-dana-bash-of-cnns-state-of-the-union-3/ |
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