Gold market trends(XAU/USD) is seeing a pullback, trading around the $2,640 mark per troy ounce. This comes after a strong rally last week, where gold prices surged by nearly 1.4% to reach record highs. The shift in momentum is largely attributed to Chinese investors moving their capital towards equities, as the CSI 300 index rose by over 7.5% on Monday. Additionally, a positive outlook on China’s property market, driven by reduced mortgage rates, is causing investors to reconsider gold as a safe-haven investment.
Impact of Federal Reserve Rate Cuts
Gold’s rally earlier this month followed a decision by the U.S. Federal Reserve to reduce interest rates by 0.50%, which lowered the opportunity cost of holding gold. However, stronger-than-expected economic data from the U.S. has dampened the likelihood of another aggressive rate cut in November. According to the CME FedWatch tool, there is still a more than 50% chance of a similar rate cut, but the outlook remains uncertain.
Diverging Investor Opinions on Gold’s Future
After touching a record high of $2,685 last week, gold price forecast has started to pull back. Investors remain divided on whether this correction will deepen or if gold will soon resume its uptrend. In a recent survey conducted by Kitco News, opinions varied significantly:
- Darin Newsom from Barchart.com believes the uptrend will continue, citing global instability as a reason why investors will likely stick with gold.
- Ole Hansen, Head of Commodity Strategy at Saxo Bank, takes a more cautious approach, predicting a slowdown in the rally due to FOMO-driven traders and weaker physical demand.
- Adrian Day, president of Adrian Day Asset Management, expects little change in the short term but remains highly optimistic about gold’s long-term prospects.
Technical Analysis: Is a Deeper Correction in Sight?
From a technical analysis perspective, gold continues to experience a pullback, but the broader uptrend is still intact across the short, medium, and long-term charts. The saying “the trend is your friend” applies here, suggesting that gold may continue its upward trajectory in the future.
Gold’s Relative Strength Index (RSI) indicates that it remains in an overbought state. However, if it falls back into neutral territory, it may prompt traders to close their long positions and consider shorting the metal. The correction is likely to find solid support at $2,600, followed by $2,550 and $2,544, which correspond to key Fibonacci retracement levels.
If the correction loses momentum, there’s a strong possibility that gold bulls will regain control, pushing prices toward new highs. The next upside targets are the psychological levels of $2,700 and $2,750.
Conclusion
Gold’s correction deepens as investors shift focus towards equities and away from traditional safe-haven assets like gold. The global outlook, particularly in China and the U.S., will continue to influence gold price forecast. Whether this correction will extend further or if the precious metal will resume its uptrend remains uncertain, with investor opinions divided.
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