The Gold price has attracted some sellers for the second consecutive day, but the downside appears to be limited. This is due to optimism surrounding China’s stimulus measures, which is driving away some safe-haven flows from the XAU/USD. Despite a modest uptick in the US Dollar, expectations of a dovish stance from the Federal Reserve and ongoing geopolitical risks are helping to limit losses for the precious metal.
Israel’s recent aggressive actions against Iran’s allies in Yemen and Lebanon have raised concerns about a potential escalation of conflicts in the Middle East, which could draw in Iran and the United States. This geopolitical tension should act as a tailwind for the safe-haven Gold price. Additionally, the market is pricing in the possibility of the Federal Reserve making another half-point rate cut at its upcoming meeting in November, which is supporting the non-yielding yellow metal.
In light of recent events, the global risk sentiment has received a boost from China’s stimulus package, which includes measures to lower mortgage rates for existing home loans. This, along with other support measures from China’s government, has contributed to an upbeat mood in the market. However, mixed data from China’s official Manufacturing PMI and NBS Non-Manufacturing PMI, as well as the contraction in Caixin Manufacturing PMI, have added some downward pressure on Gold price.
From a technical standpoint, Gold price’s bullish potential remains intact, with an ascending trend-channel breakout still in play. Support levels are seen near the $2,625 region, followed by $2,600 and $2,560. On the upside, immediate hurdles are at $2,670-2,671 and $2,685-2,686, with a record high at $2,700 potentially triggering further bullish momentum. Traders are now looking to Fed Chair Jerome Powell’s upcoming speech for guidance and potential market-moving insights.
In conclusion, the Gold price is currently facing some downward pressure due to a risk-on environment and a modest USD uptick. However, geopolitical risks, dovish Fed expectations, and China’s stimulus measures are expected to help limit losses for the safe-haven commodity. Technical factors suggest that the bullish potential for Gold price remains intact, with key support and resistance levels identified for traders to monitor. Investors will closely watch upcoming events, such as Fed Chair Powell’s speech, for further direction in the market.
