On November 5th, yesterday Wednesday, we noted that as the US midterm election results were released, the dollar and US Treasury yields declined in tandem, which supported the rise in gold prices. However, whether the gold price rebound can continue still depends on the non-farm payroll data to be released this Friday. Currently, the Federal Reserve's rate hike outlook continues to limit the upside for gold. Additionally, short-term technical indicators show that after stabilizing from consecutive declines, gold has a need for a rebound correction. Therefore, in terms of trading, it is recommended to watch the downside support at $4,000, followed by $3,970, and the upside resistance at the breakthrough of $4,050, followed by $4,075 and $4,100.
Looking at the subsequent price action, during the European session on Wednesday, after gold broke through the psychological barrier at $4,000, it maintained a high-level sideways oscillation around the $4,030 to $4,050 range until the US session, when gold broke upward and continued to trade sideways in the $4,050 to $4,070 range. After the opening on Thursday, gold broke upward and surged, further refreshing this week's high to $4,146. After encountering resistance, gold pulled back to $4,109 and stabilized, currently oscillating sideways around $4,130.
Overall, gold's short-term further rebound is consistent with the direction suggested by technical indicators. The rebound height before the non-farm payroll data has been somewhat stronger than we expected. According to Wolfinance star analysts, gold's sharp rally over two consecutive trading days, hitting a new two-week high, is the result of a combination of short-term political event catalysts and technical repair from prior overselling. Specifically: first, the US midterm elections have concluded with a landslide victory for the Democrats, which is the most direct trigger, as the dollar and US Treasury yields fell in tandem, reducing the opportunity cost of holding gold; second, geopolitical risk premiums have eased, with the pace of US-Iran conflict slowing, and market expectations for Trump to launch another large-scale strike on Iran have declined, causing oil prices to retreat from highs and alleviating inflation concerns, which marginally cooled expectations for further Fed rate hikes; third, gold had previously experienced over two months of decline, hitting a new one-year low and entering oversold territory, with short sellers taking profits at low levels and bargain-hunting buyers stepping in, driving a retaliatory rebound in prices; fourth, central banks' sustained gold purchase demand—global central bank gold reserves increased by 321 tons net in the third quarter of this year, a new high since April 2024. Central banks' continued large-scale physical buying provides important bottom support for gold prices at low levels.
On the daily chart, gold has bottomed out from a one-year low and refreshed a new two-week high, showing relatively strong short-term performance. For downside support, watch the psychological level at $4,100, followed by the daily Bollinger Band middle track near $4,070, which is also near the weekly MA5 moving average, as well as Wednesday's gold rally high. If gold breaks through here during the day, it will continue to rally. For upside resistance, watch the intraday high near $4,150, followed by the psychological level at $4,200. Before gold broke downward in late October, this was the main resistance level during three consecutive weeks of low-level oscillation. The 5-day moving average has formed a bullish crossover, the MACD indicator has formed a golden cross, and the KDJ and RSI indicators are crossing upward. Short-term technical indicators show that bulls are gradually gaining the upper hand, and gold has opportunities for further rebound.
Intraday gold reference: The US midterm election results directly triggered gold's rebound, combined with the easing of Middle East geopolitical risk premiums, short covering and bargain hunting, and sustained central bank gold purchase demand, jointly supporting gold prices' two consecutive trading days of sharp gains. In terms of trading, it is recommended to adopt a range-trading approach, with downside support at $4,100 and $4,070, and upside resistance at $4,150 and $4,200.
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