XAU/USD: increased demand for physical gold and contracts based on it supports the pair’s growth
| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | BUY STOP |
| Entry Point | 2770.0 |
| Take Profit | 2950.0 |
| Stop Loss | 2700.0 |
| Key Levels | 2530.0, 2700.0, 2770.0, 2950.0 |
| Alternative scenario | |
|---|---|
| Recommendation | SELL STOP |
| Entry Point | 2700.0 |
| Take Profit | 2530.0 |
| Stop Loss | 2800.0 |
| Key Levels | 2530.0, 2700.0, 2770.0, 2950.0 |
Current trend
The XAU/USD pair is approaching 2750.0 amid increased demand for both physical gold and contracts based on it. The catalyst for the upward trend is still the situation in the debt market. The relationship between demand for bonds and their yield is inverse, and now this figure for leading 10-year US securities is 4.2780%, higher than 4.0015% in the middle of the month, which reflects a decrease in investor interest in them, so the freed-up funds are redirected to metal group assets.
In addition, price dynamics are determined by the upcoming US presidential elections. Amid uncertainty about their results, investors prefer conservative assets to volatile stocks. Moreover, according to the BullionVault exchange, in anticipation of the election event, the US Mint issued several new gold and silver coins that are in great demand. Representatives of the Republican candidate Donald Trump’s campaign team are urging citizens to buy physical gold if Kamala Harris wins. On the Fox Networks Group TV channel, hosts are advising people to buy gold coins to protect themselves from financial instability if the Democratic Party comes to power.
The high demand for gold is confirmed by leading commodity exchanges. According to the report of the US Commodity Futures Trading Commission (CFTC), last week, net speculative positions increased from 286.4K to 296.2K.
Support and resistance
On the daily chart, the trading instrument is rising, holding just below the resistance line of the long-term ascending channel 2780.0–2550.0.
Technical indicators are strengthening the buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO histogram is forming correction bars above the transition level.
Resistance levels: 2770.0, 2950.0.
Support levels: 2700.0, 2530.0.
Trading tips
Long positions may be opened after the price rises and consolidates above 2770.0, with the target at 2950.0. Stop loss — 2700.0. Implementation period: 7 days or more.
Short positions may be opened after the price falls and consolidates below 2700.0, with the target at 2530.0. Stop loss — 2800.0.
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