Technical Analysis:
1. Fibonacci Retracement:
Indicates an upward possibility.
Current gold price: 1637.47.
Expected target range on NFP data release: 1735-1765-1789.
Fundamental Analysis:
1. Fed’s Reverse Repurchase Agreement (RRP) Facility:
Creation of a reverse repurchase agreement accessible by foreign central banks.
Foreign RRP allows international monetary authorities to keep cash earning interest.
Foreign institutions currently have about $295 billion stashed, down from $301 billion.
2. Bank of Japan Intervention (21.10.2022):
Bank of Japan dumped $30 billion of its U.S dollar reserves to protect the yen.
Triggered a flash crash in the U.S dollar, leading to a rally in Precious Metals, including Gold.
3. Russia’s War Against Ukraine:
Causing upward pressure on inflation and weighing on global economic activity.
Committee (assumed FOMC) is highly attentive to inflation risks.
4. FOMC and Post FOMC Trading:
Correct trading directions on both FOMC and Post FOMC days.
Spot Gold broke below $1666 on Hawkish FOMC and improved risk tone.
Reversed scenarios: $1666 zone – $1636 – $1616 and reversed from $1616 to $1648.
5. Fed’s Stance on Interest Rates:
The Fed sees interest rates increasing until inflation is brought down.
The peak rate is expected to be higher than previously estimated.
Summary and Potential Implications:
1. Technical Outlook:
The Fibonacci retracement suggests an upward possibility, with the NFP data release expected to drive gold towards the range of 1735-1765-1789.
2. Fundamental Factors:
The Fed’s tools, including the RRP facility, are influencing the movement of foreign reserves.
Bank of Japan’s intervention and geopolitical events (Russia-Ukraine war) are contributing to market dynamics.
3. Market Reaction to FOMC:
Gold experienced a significant move in response to Hawkish FOMC statements and improved risk tone.
Correct trading directions on FOMC and Post FOMC days indicate market sensitivity to central bank actions.
4.Cautionary Note:
Geopolitical events and central bank actions can introduce volatility, and traders should be cautious and adapt their strategies accordingly.
Conclusion:
Considering the technical and fundamental factors, it’s important to closely monitor upcoming economic events, geopolitical developments, and central bank actions. The information provided suggests a nuanced market influenced by a combination of technical trends and global events. As always, risk management is crucial in navigating the uncertainties of the financial markets.
Support and Resistance Levels:
Resistance Levels (R):
- R1:1632.85 SMA R1:1698.57
- R2: 1645.89 SMA R2:1705.92
- R3: 1659.85 SMA R3:1713.22
- R4: 1675.89 SMA R4:1718.66
- R5: 1688.79 SMA R5:1725.89
Support Levels (S):
- S1: 1622.47 SMA S1:1669.89
- S2: 1612.56 SMA S2:1653.43
- S3: 1602.11 SMA S3:1628.68
- S4: 1591.89 SMA S4:1611.22
- S5: 1585.00
