The precious metal rallied more than 7% in October, as the war in the Middle East erupted, sparking a flight to safety. However, the conflict appears to be relatively contained for now, without a broader spillover, which limits flows to the safe-haven commodity. The Fed's hawkish bias meanwhile, eroded after policymakers delivered their second consecutive hold last week and leaned dovish. Furthermore, the employment report was weak, with the addition if just 150,000 jobs in October and the worst print in nearly three years. These outcomes strengthened expectations that the Fed is done hiking, which sent the USDOLLAR lower.
XAU/USD was unable to benefit from these developments though and slides further this week, as the greenback rebounds, threatening the 23.6% Fibonacci of last month's advance. This can send it to a test of the critical 1,943-33 region, where the EMA200 and the 38.2% Fibonacci converge. Daily closes below it would shift bias to the downside and bring 1.884-6 in the spotlight, although fresh impetus would likely be needed for that.
Above the aforementioned key support however, gold is in the driver's seat, with the ability to return above the 2K mark, but does not yet inspire confidence for pursuing new record highs (2.080). Risk for an escalation in the Middle East remains and there is no compelling factor at this point to support a broader USD recovery after the Fed softened its stance. There is no major economic release for the US this week, but there are a series of Fed speakers, including Chair Powell.
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. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.