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Fundamentals

During the Asian session on Monday (October 30), spot gold fluctuated downward with gold opening down to 1996 in early trading and currently trading around 2000. Gold prices surged higher again on Friday, breaking through previous highs, climbing as high as 2009 and falling as low as 1976. According to the forecast last Friday, the lower bound was 1977, but the advice to investors is to take short positions. After the first position, the gold price was stopped by $5. But if you go short at 2008, you can basically make a profit of $10. The overall profitability is impressive. The surge of gold prices during the European and U.S. sessions last Friday was mainly driven by the escalation of the Palestinian-Israeli conflict, as Israel dismissed a UN resolution and carried out destructive strikes on the Gaza Strip. Risk aversion increased again. Moreover, market expectations for a pause in rate hikes by the Fed in its early November meeting have continued to shore up gold. Gold prices spiked above 2000, up nearly $200 in less than one month. The speed is too fast and the slope is too steep for an uptrend, so we need to proceed with caution next. The risk of keeping buying high is great and the profit/loss ratio is extremely low. Therefore, we continue to maintain our strategy of not going long without a plunge, and keep selling high. With blockbuster events such as the Fed decision and the US non-farm payrolls report coming this week, oscillation is expected to increase, and investors need to manage their positions.

Data: The US core PCE in September was 3.7%, compared with the expected 3.7% and the previous value of 3.8%.  

Today's attention: There is no blockbuster data today. The data to watch for in the second half of the week include the ADP employment number on Wednesday, the initial jobless claims on Thursday, the Fed's interest rate decision, Powell's monetary policy press conference, and the US unemployment rate for October and the seasonally adjusted non-farm payrolls data for October on Friday.  

Technical Analysis

Trading at the daily timeframe, gold prices remained bullish on Friday, with the lowest correction around 1976. In Europe and the American sessions, gold prices surged, breaking through the previous high at 1997, standing above 2000, and rising as high as 2009, and finally closing a full bull candle. The peak and bottom of the market are largely in line with our expectations. If investors took short positions at key points, the profit margin was still reasonable, and we should be content. At present, the price of gold is still dominated by the geopolitical situation. If risk aversion does not cool down for a day, it will be difficult for gold prices to decline largely. Therefore, we still have to be bullish on the market, but don't expect too much about the space below. However, at the same time, we should notice the fact that risk aversion has become a reality, and the market has been price-in, showing a large risk premium. Unless there is a marginal intensification of the conflict, that is, more countries join the war, the upside of the gold price is relatively limited. Currently, there has been an overbought phenomenon on the technical side, and the longer it accumulates, the greater the need for correction. If you want to go long, you need to wait for an emotional catharsis to release the risk at high. At the moment, my opinion on the big oscillation of the market is that it is more friendly to veteran traders or investors who are patient enough. For novices or investors who are greedy for small profits, the risk-return ratio is completely unequal. Today, investors need to focus on the performance of gold prices in the range of 1985-2009. If the price effectively falls below 1989, then it is very likely to be in line with 1974. Conversely, if there is a valid break above 2009, then the resistance around 2020 can be seen above.

Traders can mainly go short at high during the day. If the price rises to around 2009, you can still go short with small positions in the short term. The stop loss is 2013. The first target to take profit is 1988, where you can reduce your positions and move the stop loss to break even, and the second target is 1974. If the gold price rallies again at 2021, you can take a short position again. This will leave the stop loss at $5. The target to take profit and the first short position are unchanged.

Trading Recommendations

Trading Direction: Short

Entry Price: 2009

Target Price: 1989

Stop Loss: 2013

Support: 1989.000/1974.000

Resistance: 2009.000/2020.000