XAUUSD on the rise ahead of the FOMC?

10 oct. 2023

After spending most of the day in a narrow range above $1,849, gold gained momentum and pushed into the $1,865 area during the American session. The yield of the benchmark US ten-year Treasury bond declined to around 4.6%, allowing XAU/USD to rise further. XAU/USD maintains modest intraday gains, and the daily chart shows that it has recorded a higher high and a higher low, in line with a bullish extension. However, the precious metal continues to develop below all of its moving averages, with the 20-period moving average maintaining a downward slope around $1,882. At the same time, technical indicators have stabilized at negative levels, losing their upward strength after the correction of extreme oversold conditions. In the short term, and according to the 4-hour chart, the risk is tilted to the upside. Technical indicators are recovering after correcting overbought readings but remain below their weekly peaks. Meanwhile, the 20-period moving average continues to gain upward momentum below the current level, reflecting that short-term buyers are still strong.

Support levels: 1,852.00 1,843 1,832
Resistance levels: 1,8651,880 1,892

Spot gold extended its weekly rally to $1,865.35 per troy ounce as investors continue to seek safety, while the US dollar weakens following comments from several Federal Reserve (Fed) officials, implying the absence of further monetary tightening. Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan, speaking at the National Association for Business Economics, emphasized that higher bond yields help tighten financial conditions and could offset the need for further hikes. On Tuesday, Atlanta Federal Reserve President Raphael Bostic added that the monetary policy rate is sufficiently restrictive to achieve the 2% inflation target, as the policy's impact has yet to materialize. Bostic also stated that inflation has improved significantly, though he reiterated that there is still a long way to go to reach the target. Meanwhile, tensions in the Middle East have fueled demand for Treasury bonds, leading to a decline in yields. Currently, the yield on the 10-year Treasury offers 4.63%, down by 14 basis points (bp), while the 2-year bond yield is at 4.96%, down by 12 bp for the day. The chart clearly shows the three restart points: accumulation, manipulation, and then distribution. At the moment, I expect a rebound on a swing low at the 185 level and then plan to enter Long with a target level of 1900-1910. Let me know what you think. Happy trading to all from Nicola, CEO of Forex48 Trading Academy.