Gold gained nearly 5% last week, rebounding strongly from the $3,800 level, which continues to act as a major support zone. The precious metal is currently trading at $4,095, up 0.61% in today’s session. From a technical perspective, Gold is trading above its short-term moving averages, with the 9-Day EMA at $4,047 and the 20-Day EMA at $4,069. Sustaining above these levels indicates improving buying momentum and a strengthening short-term trend.
On the fundamental front, renewed ETF inflows following the US midterm elections are signalling recovering investor demand for Gold, with holdings potentially recording a fourth consecutive month of early-period gains. Despite stronger-than-expected US jobs data increasing expectations of a potential Fed rate hike next month, Gold has found support from declining Treasury yields and oil prices, alongside persistent political uncertainty. Markets will now focus on the upcoming US CPI report for further clues on the Fed’s interest rate outlook. While higher interest rates remain a headwind for non-yielding assets such as Gold, renewed safe-haven demand and ETF buying are helping support the recovery.
For intraday traders, a long position can be considered, with immediate support placed at $4,064, coinciding with the 20-Day EMA and a horizontal support zone, followed by the next support at $4,026, near Friday’s session low. On the upside, immediate resistance stands at $4,134, the current session high, followed by the 200-Day EMA at $4,254. Silver is currently trading at $52.11, up 0.42% in today’s session; immediate support is placed at $48.96 and resistance at $54.00.
Crude oil prices witnessed a sharp selloff last week, with WTI down 12.57% and Brent down 13.82%. Both instruments are trading slightly lower during the Asian session on Monday, with WTI down 0.84% near $90 and Brent down 0.94%, breaking below the $100 mark.
Crude prices have fallen following comments by US President Donald Trump that further military strikes on Iran are highly unlikely, assuming progress is made on the nuclear programme and the Strait of Hormuz stays open. Trump had previously indicated that he might be inclined to re-initiate strikes on Iran following the US mid-term elections last week, but there has been absolutely no sign of any large-scale US military action. Iran has said it will respond to any escalation by targeting U.S. and Israeli assets. Oil is clearly heading into a glut as recovering Middle East output, increased production from other countries and weak demand have pushed global supply well above consumption. A JPMorgan report released on Friday indicated a global surplus of 1.1 m bpd in September, which is set to grow to 1.4 m bpd in October. On Sunday, Iraq also reached an agreement with the U.S. to allow Iraqi crude to be exported through the Strait of Hormuz via a shipping lane off Oman. That in itself is a very significant development and suggests that prices are likely to remain under pressure in the near term.
Technically, WTI has broken below an upward-sloping trendline connecting the lows of 2nd July, 5th August, 26th August, and 6th October, suggesting bearish pressure. Moreover, RSI remains sloping downward below the 50 mark, indicating bearish momentum for now. Brent also suggests a similar market structure, with recent lows near $96.71 remaining the last leg of short-term support, which, if broken, could see additional selling pressure for the commodity.
