Gold Surge to New High Amid Intensify Geopolitical Risk

• Gold surged to an all-time high amid heightened tension in the Middle East.

• Strong U.S. economic indicators drive the U.S. dollar to its highest level in 10 weeks.

• ECB cuts interest rate by 25 bps, hammering euros strength.

Market Summary

Gold surged to the $2700 mark in the last session as heightened geopolitical risks in the Middle East spurred demand for safe-haven assets. Reports of the Israeli military killing Hamas leader Yahya Sinwar, a key figure behind the attacks that escalated into the Gaza war, have intensified market concerns, driving gold's upward momentum. 

On the U.S. front, strong economic data, including lower Initial Jobless Claims and better-than-expected Retail Sales, boosted the dollar's strength against its peers. However, despite this robust data, Wall Street closed lower, as fears of a more hawkish Fed outlook weighed on investor sentiment.

Meanwhile, the Japanese yen rose above the 150 mark against the stronger dollar, with market participants speculating the pair could reach 160 due to uncertainty surrounding the Bank of Japan's upcoming policy decisions.

The ECB delivered a 25 bps rate cut, in line with market expectations, while a 1.7% CPI reading has led to speculation of a potentially larger rate cut in December.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

-50 bps (7%) VS -25 bps (93%)

Market Movement

DOLLAR_INDX, H4

The Dollar Index extended its gains, buoyed by strong U.S. economic data that strengthened the outlook for the U.S. economy. Core Retail Sales increased from 0.2% to 0.5%, surpassing expectations of 0.1%. Similarly, the Philadelphia Fed Manufacturing Index posted a much better-than-expected reading of 10.3 (forecast: 4.2). U.S. Initial Jobless Claims were in line with market expectations at 241K. These positive data points led to a rise in U.S. Treasury yields, lowering expectations for aggressive rate cuts by the Federal Reserve.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 67, suggesting the index might enter overbought territory.

Resistance level: 103.95, 104.95

Support level: 103.25, 102.50

XAU/USD, H4

Gold prices continued to climb as rising tensions in the Middle East spurred safe-haven buying. The death of Hamas leader Yahya Sinwar, a key figure in the October 7 attack, has intensified geopolitical concerns, further supporting gold prices. The market remains focused on the conflict, driving investors toward gold, although gains are still capped by a stronger U.S. dollar amid recent positive economic data.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 72, suggesting the commodity might enter overbought territory.

Resistance level: 2705.00, 2725.00

Support level: 2690.00, 2670.00

GBP/USD，H4

The GBP/USD pair has extended its decline to a 2-month low, driven by the softer-than-expected UK CPI reading and robust U.S. economic indicators, which bolstered the U.S. dollar. However, the bearish momentum appears to be easing. If the pair manages to break above the 1.3040 level, it could signal a potential trend reversal. Todays U.K. retail sales report is a key focus for traders, as it may provide the catalyst for a technical rebound, depending on the strength of the data.

GBP/USD dipped lower, but the losses were quickly recovered in the recent session, suggesting a potential trend reversal for the pair. The RSI remains below the 50 level, while the MACD is on the brink of breaking above the zero line, suggesting that the bearish momentum is easing.

Resistance level: 1.3060, 1.3140

Support level: 1.2980, 1.2910

CL OIL, H4

Crude oil futures edged higher on Friday, underpinned by a surprise drop in U.S. oil inventories and ongoing tensions in the Middle East. Despite these factors, crude prices are set for their largest weekly decline in over a month. Data from the Energy Information Administration (EIA) showed U.S. crude oil, gasoline, and distillate inventories all dropped last week. However, concerns over weakening demand, following reduced forecasts from OPEC and the International Energy Agency, dragged Brent and WTI down about 6% this week.

Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bullish momentum, while RSI is at 37, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.

Resistance level: 72.55, 74.75

Support level: 69.85, 67.10