Created on October 16, 2024

• Currently, the price of gold is stabilizing around $2,667 per ounce at the time of writing, as global geopolitical tensions continue to support it.
• As is well known, a stronger US dollar makes dollar-denominated commodities more expensive for holders of other currencies, affecting demand.

According to gold trading companies’ platforms, gold prices on the Comex exchange have been hovering around $2,600 per ounce during the past few sessions, with the upward movement pausing. 

Gold prices have been struggling to surpass their September peak, when prices rose to $2,696.90 per ounce. Recently, the US dollar has risen sharply over the past few sessions as investors expect the US Federal Reserve to not cut interest rates by a larger amount like its previous meeting. In the United States, rising inflation and a resilient Labor market have reduced bets on further cuts in interest rates by the Federal Reserve. 

Now, investors expect the Fed to cut US interest rates by 25 basis points at its November meeting. In September, the US central bank cut rates by 50 basis points, surprising financial and commodity markets. The US dollar extended its gains the previous week, hitting its highest level in more than two months, after Federal Reserve Governor Christopher Waller urged “more caution” about future rate cuts, citing recent economic data. Waller added: “Whatever happens in the near term, my baseline continues to call for gradual rate cuts over the next year.” 

Also, gold bulls are facing some pressure from easing tensions in the Middle East as the world awaits Israel’s response to Iran after the latter attacked Tel Aviv on October 1st. As a result, gold prices are likely to face some headwinds after the Washington Post reported that Israeli Prime Minister Benjamin Netanyahu told the United States that Israel would target the Iranian military, not nuclear or oil facilities. Furthermore, the report indicates that there will be a more limited counterstrike aimed at preventing a wider war. However, there has been no escalation so far since Iran launched ballistic missiles towards Israel on October 1st. Ultimately, this has somewhat eased tensions in the region. 

According to gold analysts today, gold prices enjoy support above the 21-day simple moving average (SMA) at $2,635 per ounce for the rest of this week. The 14-day Relative Strength Index (RSI) is flat, indicating that any decline in prices may be a good buying opportunity for traders. 

If gold prices rebound from their current slumber, the next target could be around $2,700 per ounce. Conversely, immediate support is seen at the 21-day simple moving average at $2,632, which will test the three-week low near the $2600 threshold below. Overall, a sustained break below the latter could extend to the downside towards the September 20 low of $2585 per ounce. 

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