Gold Reaches All-Time Highs at $2,700, Facing Resistance

Summary:
• Gold price rose to new all-time highs on Thursday with strong fundamentals, but needs a stronger safe haven demand to protect gains.

Gold surged to a record high of $2,696 per ounce on Thursday, driven by weak US macroeconomic data and increased tensions in the Middle East. The precious metal has been steadily climbing since October 10, recording a 2.5 percent increase in the last five sessions. Gold, being a non-yielding asset, is also benefiting from the stagnant US treasury bond yields.

US Economic Weakness

The rise in gold prices is further supported by the weakened state of the two largest economies, the United States and China. While US Initial Jobless Claims figures met expectations at 241k, a revision of the previous week’s numbers to 260k suggests underlying fragility in the labor market. On the other hand, Retail Sales, although showing strong consumption in the US, have added support to the US dollar, which could potentially cap gold prices.

China’s Impact on Gold

China’s efforts to stimulate the economy have not generated the expected investor sentiment, leading to an increased demand for gold. With the release of Q3 GDP figures looming, further volatility in XAUUSD is anticipated.

Gold Price Forecast

Currently, bullish momentum is favored on the hourly chart, with prices expected to remain above 2,686 to support further upside. Resistance is likely to be encountered at 2,700, with a potential break leading to a test of the second resistance at 2,710. Conversely, initial support is expected at 2,675, with a breach potentially extending to 2,665.