Current trend

The XAU/USD pair is showing moderate growth, developing another "bullish" impetus formed at the end of last week, when it began to recover from a small corrective decline. The instrument is testing 2780.00 for a breakout, updating record highs.

The quotes are supported by the previous drivers of movement, among which one can note the growing political uncertainty in the USA, as well as geopolitical risks in the Middle East and Eastern Europe. In addition, investors expect further monetary easing by leading global regulators in November, which will also support gold, which does not generate interest income. The US Federal Reserve could adjust its interest rate by –25 basis points, while the European Central Bank (ECB) or the Bank of England could adjust it by –50 basis points. The XAU/USD pair is further supported by continued high demand for physical gold from China and India.

Among the macroeconomic publications this week in the US, traders will pay attention to the October statistics on the labor market: today, at 14:15 (GMT 2), a report from Automatic Data Processing (ADP) on private sector employment will be presented, and on Friday — data from the US Department of Labor. Forecasts suggest a slowdown in Nonfarm Payrolls from 254.0 thousand to 115.0 thousand and a decline in Average Hourly Earnings from 0.4% to 0.3%, while the Unemployment Rate may remain unchanged at 4.1%.

The gold contracts market continues its period of global growth: according to the report of the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in the precious metal increased to 296.2 thousand from 286.4 thousand positions previously. In turn, the balance in contracts secured by real money amounted to 257.959 thousand for the "bulls" versus 15.807 thousand for the "bears". Last week, buyers opened 4.319 thousand contracts, while sellers reduced their number by 2.487 thousand.

Support and resistance

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new record highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator is approaching its highs, indicating the risks of an overbought instrument in the ultra-short term.

Resistance levels: 2790.00, 2800.00, 2810.00, 2820.00.

Support levels: 2775.00, 2760.00, 2740.53, 2720.00.

Trading tips

Long positions can be opened after a breakout of 2790.00 with the target of 2820.00. Stop-loss — 2775.00. Implementation time: 1-2 days.

A rebound from 2790.00 as from resistance, followed by a breakdown of 2775.00 may become a signal for opening of new short positions with the target at 2740.53. Stop-loss — 2790.00.