On Monday (October 28th), spot gold opened significantly lower, with prices briefly falling below $2,725 per ounce during the Asian morning session; however, gold prices recovered most of the intraday losses, closing above $2,740 per ounce for the day.
As of Monday's close, spot gold was reported at $2,742.05 per ounce, with a daily decline of nearly 0.2%; the lowest price during the trading session was $2,724.64 per ounce.
Analyst Christian Borjon Valencia noted that gold trading prices were slightly lower on Monday, dragged down by the rise in U.S. Treasury yields. The U.S. 10-year Treasury yield continued to climb, increasing by 3 basis points to 4.272%.
However, Valencia pointed out that political and geopolitical tensions are ongoing. This has limited the decline in gold prices.
Geopolitics once again came into focus over the weekend after Israel fired missiles at several Iranian military targets, avoiding energy and nuclear facilities.
Iranian Foreign Ministry spokesman Esmaeil Baghaei stated on Monday, local time, that Tehran will "use all available tools" to respond to Israel's weekend attacks on Iranian military targets.
Iran had previously downplayed the damage caused by Israeli attacks, emphasizing that Iran's air defense systems were effective in dealing with and intercepting the attacks, thus suffering only "limited" losses.
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Baghaei said: "(Iran) will use all available tools to make a clear and effective response to the Zionist regime."
Baghaei also indicated that the nature of Iran's response depends on the nature of Israel's attacks, but he did not provide further explanation or disclose more details.
Iran's Supreme Leader, Ayatollah Khamenei, publicly addressed the Israeli attacks on Iran for the first time on Sunday, emphasizing that the attacks should neither be "exaggerated" nor "understated."On the economic data front, on Tuesday, the United States is set to release the September JOLTS job openings report, which is expected to decrease from 8.04 million to 7.99 million. Concurrently, the Conference Board will announce the U.S. consumer confidence index for October, which may rise from 98.7 to 99.3.
Later in the week, traders will also be looking forward to the U.S. third-quarter GDP, PCE price index, and the non-farm payrolls report, which could potentially impact the Federal Reserve's policy outlook.
How to trade gold?
Valencia notes that the upward trend in gold prices remains intact, with no reversal patterns near the record highs, but has been consolidating within the $2,700-$2,750 per ounce range. Should gold prices break through the upper boundary of the range, the immediate target will be the historical high of $2,758 per ounce. Once breached, the next target will be the $2,775 per ounce area, followed by a challenge to $2,800 per ounce.
On the other hand, Valencia adds that if sellers enter the market and push gold prices below $2,700 per ounce, the first support level will be the swing high from September 26, which has turned into a support level at $2,685 per ounce; followed by the 50-day simple moving average (SMA) support at $2,603 per ounce.
Valencia states that the momentum indicates that the Relative Strength Index (RSI) remains bullish but has moderated, suggesting that gold may consolidate. Gold had the potential to set a new historical high before the RSI cleared its most recent peak. Otherwise, be cautious of a gold price correction.
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