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Fundamentals

During the Asian session on Monday (October 23), spot gold fluctuated in a narrow range and is currently trading around 1975. In the past two weeks, gold prices have rebounded as high as nearly $190, breaking through multiple resistances and approaching the 2,000 mark, and the biggest factor is risk aversion. Investors who follow us know that we have emphasized taking long positions in the long term since the gold price was below 1850. Especially after the outbreak of the Middle East conflict, we have repeatedly stressed that the tensions in the Middle East are unlikely to come to an end in the short term. At the same time, we also stressed last Friday that the odds of going short at high may be larger at the moment. On Friday night, gold prices rose as high as around 1997 before quickly falling back to 1964. In the last trading day, investors who kept going short at key resistance positions were also quite profitable. Next, we still try to emphasize that gold prices are no longer suitable for chasing bulls because it has overreacted to risk aversion. Although the war has a tendency to expand, it is also about to become a fishtail market in the later period. As the Palestinian-Israeli conflict has become almost numb, bulls can handle part of your positions to take profit. Investors who have not entered the market can continue to go short at high in key points in order to obtain a high profit-loss ratio of returns.

During the day, there are no key news announcements, traders should focus on the development of the situation in the Middle East.

Technical Analysis

Trading at the daily timeframe, gold prices were extremely excited last week, rising from 1908 to 1997 by as much as $89. Last Friday, we set the target at the 1988 level, but the price surge near the close might surprise many investors. Traders who expected the gold price to peak earlier could have suffered losses, while those who bought high might have lost money, either. Both of them were not patient enough. There was no problem with shorting at key levels as the market retraced from 1997 to 1965. We also stressed last Friday that shorting at highs would have a higher profit/loss ratio. Investors shorting at key resistance levels on the previous trading day did earn a lot. As for this week, we can confirm now that the gold price will mainly consolidate, with the critical support level at 1950. As the Middle East conflict will probably escalate in the near term, it will fuel the safe-haven buying sentiment. However, investors will gradually get used to the Israeli-Palestinian conflict, just like the Russian-Ukrainian conflict. Thus, the market will be complicated this week. Investors are advised to buy low and sell high.

Traders can mainly buy low and sell high during the day. If the price retraces to around 1950, you can still go long with small positions in the short term. The stop loss is 1845. The first target to take profit is 1964, where you can reduce your positions and move the stop loss to break even, and the second target is 1983. If the price rises to 1983 during the day, you can still test the short position with small positions in the short term. The stop loss looks at 1988. The first target to take profit is 1964, where you can reduce your positions and move the stop loss to break even. The second target is 1950.

 Trading Recommendations

Trading Direction: Short

Entry Price: 1983

Target Price: 1965

Stop Loss: 1988

Support: 1964.000/1950.000

Resistance: 1983.000/1988.000