Current trend

The XAU/USD pair shows multidirectional trading dynamics, holding near 1935.00. At the opening of the new week, the instrument managed to update the local lows of October 17, but the quotes had already managed to recover most of the losses.

Pressure on gold intensified with the advent of "hawkish" comments from US Federal Reserve officials, including the Chair of the regulator, Jerome Powell, who reflected the officials’ readiness to maintain tight monetary policy, allowing for further increases in borrowing costs. At the same time, demand for the precious metal is gradually recovering against the backdrop of the fact that the most negative scenarios regarding the situation in the Middle East have not yet come true: other countries have taken a wait-and-see approach, preferring not to enter into the Palestinian-Israeli conflict for now, which increases the overall demand for risky assets.

The focus of investors today will be the US Federal Reserve's October report on the state of the country's budget: forecasts suggest a significant reduction in its deficit from -171.0 billion dollars to -30.0 billion dollars. In addition, inflation statistics for October will be published during the week: analysts expect a slowdown in the monthly growth rate of Consumer Price Index from 0.4% to 0.1%.

Meanwhile, the market continues to experience a period of increased activity. According to the Chicago Mercantile Exchange's CME Group Index (CVOL) volatility indicator, the change was -0.1617 points, falling to 12.9892 points, signaling increasing "bearish" pressure. On Friday, investors' gold futures position consisted of 307.024 thousand contracts and the options one consisted of 52.251 thousand contracts, significantly higher than the monthly averages of 245.000 thousand and 47.000 thousand. This indicates that investors continue to form short positions rather than a high number of options, and also that these positions are mostly profit-taking from past purchases, rather than a new selling trend.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is about to test the zero level for a breakdown. Stochastic, having fallen below the level of "20", has reversed upwards, signaling in favor of the development of corrective growth in the ultra-short term.

Resistance levels: 1940.00, 1952.66, 1963.55, 1972.85.

Support levels: 1930.00, 1915.00, 1900.00, 1880.00.

Trading tips

Short positions may be opened after a breakdown of 1930.00 with the target at 1900.00. Stop-loss — 1945.00. Implementation time: 1-2 days.

A rebound from 1930.00 as from support followed by a breakout of 1940.00 may become a signal for opening new long positions with the target at 1963.55. Stop-loss — 1930.00.