Gold Price Analysis: XAU/USD bulls monitoring the US dollar for direction

The price of the US dollar has slipped deeper into correction territory, offering upside in gold.
The potential for gold to run higher is strong from a fundamental backdrop, but technicals should also be considered.

Ross J Burland FXStreet

The price of the yellow metal has been up to test the firm resistance area which represents the accumulation of daily lows since August.

At the time of writing, XAU/USD trades at $1,915 between a low of $1,887.18 and $1,918.75.

It has been a wide range for the opening day with there being plenty of risk factors for investors to sift through.

First and foremost, there is a growing sense of urgency with respect to the US stimulus required for the population of the United States for which the US stock market now depends upon.

Meanwhile, there has been an air of optimism surrounding the US president's potential release from hospital which has been helping to support markets.

Precious metals are indeed focused on Trump's health, following a weekend of confusing messages on the severity of his health.

''In the near-term, the market's knee-jerk reaction may have buoyed gold prices as we identify signs of a flight-to-safety amid a risk-off move in markets,'' analysts at TD Securities explained.

Then, investors also have to consider the run-up to the US elections which are slated for November 3rd, but, again that mostly falls down to stimulus again.

''Barring a split government outcome, both administrations are likely to push through a large-scale a fiscal deal in no time that would help de-bottleneck the real rate suppression, lifting precious metals in the process,'' the analysts at TD Securities have explained.

''Considering a Blue Wave would likely result in the largest package, Biden's election odds are increasingly likely to drive gold prices in the coming month.''

However, from a technical analysis perspective, the price of the dollar is compelling.

The DXY has been pressured below the 93.50s.

This is significant as it has broken the late September lows and begs the question as to whether there will be a bullish 5th wave on the daily chart.

Gold and DXY technical analysis

DXY Price Analysis: EM-FX/DXY could be a tell-tale sign of things to come

In the above analysis, there is a bullish case in the making considering a number of intermarket implications and price analysis.

As for gold:

The daily chart is showing clear resistance and support.

The price is trapped.

A break of either will be significant and the best place to monitor for a breakout is down on the 4-hour chart.

A break below the 4-hour support will open the potential for a short, but it would be key to find an entry that will allow a breakeven point by the time the price reaches the daily support.

There is a risk that daily support will equate to a bullish trend.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold appears slightly bid above $4,100

Gold prices manage to reverse three consecutive daily declines, trading just above the $4,100 per troy ounce on Wednesday. The yellow metal’s recovery comes amid a humble advance in the US Dollar, mixed US Treasury yields across the board and a widespread cautious tone from the US-Iran front.

Bitcoin eyes a break above $85,000 as institutional demand returns

Bitcoin edges higher above $83,000, extending its rebound from the 50-day EMA near $80,786. US-listed BTC spot ETFs recorded over $23 million in net inflows on Tuesday, following Monday's $526 million, signaling a return of institutional demand.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.