On October 23, we noted yesterday that optimism regarding the resolution of the U.S. government shutdown and easing U.S.-China trade tensions pressured gold's safe-haven buying. This led to profit-taking in the market, causing a significant drop in gold prices on Tuesday, with a short-term risk of further corrections. Therefore, we recommend paying attention to support levels of $4100 and $4080; a deeper pullback could trigger a wave of selling, potentially accelerating declines. Key support remains at $4000; if gold stabilizes and rebounds, resistance levels to monitor are at $4150 and $4185.
From recent price movement, after a brief consolidation following the Asian session opening, gold plummeted over $100 from $4130 in less than half an hour, hitting a low of $4004. After stabilizing, prices quickly rebounded over $100, rising to $4163 where resistance was encountered. During the European session, gold fluctuated downwards, stabilizing at $4015. Once the U.S. market opened, gold rebounded to $4085 but faced resistance, dropping to stabilize at $4011, before closing with a rebound to $4113, also encountering resistance. Overall, gold maintained its downward trend on Wednesday, stabilizing around our provided support level of $4000 and reaching up to the resistance zone of $4150 before retreating to stabilize above the $4000 psychological level, which aligns with our expectations.
Wolfinance's star analyst believes that gold's drop of over $200 on Tuesday, followed by a more than $100 drop on Wednesday, was primarily due to a decrease in market risk aversion. After a substantial prior rise, profit-taking pressure emerged, pressuring gold prices. Specifically, comments from the White House's chief economic advisor indicated that the government shutdown crisis may be resolved within this week, alongside President Trump's recent statements to ease trade tensions by discussing a fair trade agreement with China during the upcoming APEC summit and a planned visit to China early next year. This bolstered market expectations that the proposed tariffs on China would not be implemented, further cooling risk aversion and weakening support for gold.
After Wednesday's drop, gold rebounded over $150, recovering all intraday losses, mainly because prices touched the psychological level of $4000, an important support barrier. However, the uncertainties surrounding the U.S. government shutdown and U.S.-China trade disputes continue to attract buyers seeking lower entry points, providing support for gold prices.
On the daily charts, gold saw a decline on Tuesday, with continued bearish momentum on Wednesday; however, prices are still operating above the upward trend line established since late August. Key supports to monitor include the middle line of the daily Bollinger Bands near $4040 and the $4000 level, which corresponds with the weekly MA5 moving average, where prices stabilized after a sharp drop on Wednesday. Potential resistance levels above include the weekly Bollinger Bands' upper line around $4135, followed by the 10-day moving average level at $4165, where the price was met with resistance on its recent rally. The 5-day moving average is signaling a potential death cross, the MACD indicator also shows a death cross formation, while KDJ and RSI appear to be trending downwards. The short-term technical outlook suggests that gold might face challenges to its rising momentum with the risk of further declines.
Intraday outlook for gold: Market optimism regarding the U.S. government shutdown and U.S.-China trade situations is pushing down gold's safe-haven purchases, leading to short-term price pressures due to profit-taking. Nevertheless, given the high uncertainty surrounding these events, gold is stabilizing at the important psychological level of $4000. We recommend a volatile trading approach, keeping an eye on support levels of $4040 and $4000, while resistance levels to watch include $4135 and $4165, with another potential target at $4200.