24K99 News - On Friday (October 11th), during the Asian market session, spot gold suddenly surged significantly, with the gold price just breaking through $2645 per ounce, rising more than $15 within the day. Senior analyst at FXStreet, Dhwani Mehta, wrote on Friday, analyzing the technical trend of gold prices.
Gold prices continued the rebound from the three-week low of $2604 per ounce. Ahead of the release of the U.S. Producer Price Index (PPI) data later on Friday, a broad sense of risk aversion and a moderate decline in the dollar supported gold prices.
Mehta pointed out that gold prices have recaptured the key 21-day moving average, and there may be further rebound in the future.
On Thursday evening local time, the Israeli Security Cabinet will hold a meeting to decide how to respond to Iran's large-scale missile attack on Israel on the 1st of this month.
Israeli Security Cabinet member and Minister of Science Gila Gamliel said that the Security Cabinet will "make the right decision" to prevent Iran from attacking again.
Gamliel told the Israeli public broadcaster Kan that the retaliatory action is like an arrow on the string, ready to happen at any time.
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According to U.S. media Axios on Thursday local time, three U.S. and Israeli officials told Axios that President Biden and Israeli Prime Minister Netanyahu were closer to reaching an agreement on the scope of Israel's planned retaliation against Iran during their call on Wednesday. The Biden administration acknowledged that Israel will soon launch a significant attack on Iran.
On Thursday, after the release of the latest U.S. economic data, traders increased their bets on the Federal Reserve cutting interest rates by 25 basis points in November, and gold prices climbed significantly that day.
Thursday's data showed that the U.S. Consumer Price Index (CPI) rose 2.4% year-on-year in September, exceeding the expected 2.3%. The core CPI rose 3.3% year-on-year, exceeding expectations and the 3.2% in August.
Another set of data indicated that the number of initial jobless claims in the U.S. last week rose to the highest level in over a year, reflecting a weak labor market. Data released by the U.S. Department of Labor on Thursday showed that for the week ending October 5th, the number of initial jobless claims in the U.S. increased from 2.25 million in the previous week to 2.58 million, exceeding the estimated 2.3 million.According to reports, the market currently estimates that there is an 80% chance the Federal Reserve will cut interest rates by 25 basis points next month, compared to 76% before the aforementioned economic data was released. Since gold does not generate interest, it becomes the preferred investment in a rate-cutting environment.
On Thursday, spot gold closed up significantly by $22.13, a 0.85% increase, at $2,629.84 per ounce.
Focus on US PPI Data
Mehta noted that the dovish sentiment surrounding expectations for a Federal Reserve rate cut could be tested by the US PPI report, which would have a significant impact on the dollar and gold prices.
The year-over-year increase in the US PPI for September is expected to slow down to 1.6%; while the core PPI year-over-year increase for September is expected to rise to 2.7%, compared to the previous September's increase of 2.4%.
Mehta added that the optimism surrounding China's fiscal stimulus package to be launched on Saturday could continue to support gold prices.
Latest Gold Technical Analysis
Mehta wrote that buyers refused to give up on Thursday, even after gold prices closed below the key 21-day simple moving average (SMA) support level (at that time at $2,619 per ounce) on Wednesday, they still jumped back into the game.
Gold prices closed above the 21-day moving average support turned resistance level again on Thursday (currently reported at $2,628 per ounce), thus resuming the upward trend.
The 14-day Relative Strength Index (RSI) is moving higher above 50, indicating more room for upward movement.Mehta stated that the next bullish target for gold prices is seen at the psychological barrier of $2,650 per ounce and the high point near $2,670 per ounce.
On the downside, Mehta added that the recent support for gold prices is seen near the three-week low of $2,600 per ounce. If gold prices continue to break below this level, it may extend the decline and head towards the low of $2,585 per ounce on September 20th.
Should gold fall further, the price may challenge the $2,550 per ounce area, which is also where the 50-day moving average is located.
At 11:51 Beijing time, spot gold was quoted at $2,645.37 per ounce.