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Fundamentals

During the Asian session on Thursday (October 19), spot gold fluctuated upward and is currently trading around 1948. Yesterday the gold market surged all the way up without retracements. It finally closed with a long bull candle which has a long upper shadow. The rising momentum has increased. Now, the gold price nears the resistance area of 1947-1953. If it can effectively break above that area, it can easily move higher. The surge was mainly because a Gaza hospital was bombed, which intensified tensions in the Middle East. The war is likely to expand. We have been emphasizing that the conflict will not end soon, and the bullish trend will not reverse in a minute. Any change in the current situation will bring great uncertainty to the market, so there's no doubt that fluctuations will intensify. Here we stress again that investors should not go short even if they miss the chance to go long, because the stop-loss order can be easily triggered in a short position in the current situation. We advise you to go long after a retracement as the profit/loss ratios and win rates for going long are higher.

Data: The US annualized total number of new housing starts in September was 1.358 million, compared with 1.38 million expected, and the previous value was revised from 1.283 million to 1.269 million. The total number of construction permits was 1.473 million, and the expected 1.45 million was revised from 1.543 million to 1.541 million in the previous month.  

News: Christopher Waller, Fed Governor believes that if the real economy is weak, the Fed will have more space to wait and see, and let the recent rise in long-term Treasury yields play some role. If the economy continues to show strong momentum, or inflation accelerates again, further interest rate hikes may be required. Patrick Harker, the Fed's "big dove" and the Philadelphia Fed President, said monetary policy is lagging and the Fed should continue to pause interest rate hikes until early next year.  

Geographical: A fatal explosion in a hospital in Gaza, killing more than 500 people, aroused strong concern in the international community. Israel and Hamas both blamed each other for the bombing. With Palestinian President Mahmoud Abbas canceling talks with Biden, the crisis in Gaza risks further intensification.  

Key data for investors to watch today includes US jobless claims, total existing home sales in September, and EIA natural gas inventories.

Technical Analysis

Trading at the daily timeframe, gold prices strengthened unilaterally yesterday, and the Asian market started with a fluctuating upward trend. Gold once stood above 1940, challenging the resistance of the previous high in the 1947-1953 area. Finally, the price broke through strongly in the European and American markets but failed to effectively stand, the highest surged to 1962, and then the lowest fell back to 1939, closing a long upper shadow of the long bull candle. Overall, the upward momentum was strengthened yesterday, and the surge was basically in line with our expectations, but there was also a pullback. Yesterday, the surge back to the 1953 area was a good short opportunity, and the market also cashed in on profits. Next is fundamental issues and trading. As the current conflict is difficult to end, the technical side can only be used to assist. Traders should continue to pay attention to the resistance situation in the 1947-1953 area today. If this resistance level breaks again, then the level will become support, and the resistance above should focus on the 1983-1988 zone. At the current position, investors can continue to go long according to the pullback, or you can test short at key positions.

Traders can mainly buy low and sell high during the day. If the price retraces to around 1939, you can still go long with small positions in the short term. The stop loss is 1834. The first target to take profit is 1953, where you can reduce your positions and move the stop loss to break even, and the second target is 1965. If the price rises to 1965 during the day, you can still test the short position with small positions in the short term. The stop loss looks at 1970. The first target to take profit is 1953, where you can reduce your positions and move the stop loss to break even. The second target is 1934.

Trading Recommendations

Trading Direction: Long

Entry Price: 1939

Target Price: 1965

Stop Loss: 1935

Support: 1939.000/1917.000

Resistance: 1953.000/1965.000