Note These Dates For Gold Prices: Here are the Levels!

• Gold prices fell more than 1% on the last day of the month.
• Dollar sales were short-lived after the disappointing third-quarter GDP data.
• Now, $1,770 and $1,750 appear to be next targets for gold prices, according to analyst Eren Şengezer.

Gold prices managed to extend the previous week’s gains and climbed to $1,810 on Monday, but corrected deeply on Tuesday as investors avoided taking large positions ahead of major events. XAU/USD rallied once again to $1,810 on Thursday after fluctuating in a relatively tight range around $1,800. However, gold prices closed the week in negative territory below $1,780 after Friday’s decline.

What happened in the gold market last week?

Falling US Treasury yields helped XAU/USD maintain its bullish momentum earlier in the week. Although the benchmark 10-year US bond yield continued to decline on Tuesday and Wednesday, the flattening yield curve as the 2-year T-bond yield rose helped strengthen the dollar and limit the upside potential of gold. Data from the US on Wednesday showed Durable Goods Orders fell 0.4% month-on-month in October. This reading came in better than the market’s expected 1.1% decline, but failed to trigger a noticeable market reaction.

cryptocoin.com As previously reported, the US Bureau of Economic Analysis (BEA) on Thursday announced that Real Gross Domestic Product (GDP) grew by 2% year-on-year in the third quarter. The dollar came under heavy selling pressure as this pressure fell short of analysts’ 2.7% growth forecast. However, the underlying details of the report showed that the sharp decline in motor vehicle production had a major negative impact on the main GDP figure. Also, the weekly report by the U.S. Department of Labor revealed that 281,000 claims were made for unemployment benefits in the week ending October 23. Hence, dollar sales softened towards the last day of the week and gold prices fell to $1,800.

Meanwhile, the European Central Bank did not change its policy settings and did not provide any details on planned adjustments to its Pandemic Emergency Purchase Program (PEPP). At the press conference, ECB Chairman Christine Lagarde acknowledged that inflation in the euro area will remain higher for longer than initially expected and was relatively optimistic about the economic outlook. Commenting on the market pricing of the ECB’s rate hike in the second half of 2022, Lagarde said, “Our analysis certainly does not support that the terms of our forward guidance are met at the time of departure or any time afterward, as expected by the markets.”

These comments did almost nothing to change the market’s view, and a 10 basis point rate hike for July 2022 was fully priced in at the time of publication. Although the dollar weakened against the shared currency, the sharp decline in XAU/EUR limited XAU/USD gains. Ahead of the weekend, gold prices suffered heavy losses due to month-end flows and higher US T-bond yields. The US Dollar Index, which tracks the dollar’s performance against a basket of six major currencies, erased Thursday’s losses with a decisive recovery. The BEA reported that its Core Personal Consumption Expenditure (PCE) Price Index remained unchanged at 3.6% year-on-year in September.

What data will price gold prices this week?

The ISM Manufacturing PMI will hit the US economy on Monday. Ahead of the much-anticipated FOMC meeting later in the week, an optimistic PMI pressure could help investors forget the disappointing GDP report and boost the dollar. On the other hand, a dismal PMI survey may force respondents to stay on the sidelines as they try to figure out whether the Fed will wait until December before starting to cut back on asset purchases.

The ADP Employment Change data and the ISM Services PMI report will likely be ignored before the Fed announces policy decisions. If policymakers decide to continue cutting and adopt a hawkish tone in November, the dollar may outperform its rivals and gold’s short-term outlook may turn bearish. It will be interesting to see if the Fed continues to focus on the inflation outlook rather than the loss of growth momentum in the third quarter. If FOMC Chairman Jerome Powell downplays inflation concerns and worries about Q3 GDP data, the dollar could come under selling pressure again and allow XAU/USD to turn north.

The Bank of England will announce its Interest Rate Decision on Thursday. Although this event had no direct impact on gold prices, it could affect the dollar’s market value and increase market volatility. Finally, the U.S. Bureau of Labor Statistics will release its October employment report. Market consensus points to a 425,000 increase in Non-Farm Employment after September’s disappointing print of 194,000. But after the FOMC meeting, it seems unlikely that labor market data alone will change the market theme. However, a strong NFP figure can still support the dollar and vice versa.

What levels will gold prices see during the week?

With Friday’s sharp decline, gold prices fell below the 200-day, 100-day and 50-day SMAs. Additionally, according to analyst Eren Şengezer, the Relative Strength Index (RSI) indicator on the daily chart has dropped below 50, indicating that the bearish momentum is gaining momentum. Gold prices seem to have broken below the ascending trendline that has acted as support since the beginning of October. On the downside, the next support is located at $1,770 (previous resistance, 61.8% retracement of the Fibonacci April-June uptrend) ahead of $1,750 (the static level).

A daily close below the second level could open the door for additional losses towards $1,730. On the flip side, strong resistance seems to have formed at $1,790 (100-day SMA, 200-day SMA) before $1,800 (psychological level) and $1,810 (static level). Weekly price action showed $1,810 to be a key hurdle and close. If buyers manage to push XAU/USD above this level, the short-term technical outlook could turn bullish.

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