Fundamental Analysis

• The Bank of Japan decided to maintain interest rates, and the market interprets the governor’s stance as cautious regarding rate hikes.
• With the start of the U.S. rate cut cycle, gold continues its bullish trend.
• Besides the rate cuts, geopolitical risks and central bank gold purchases may also be contributing factors.

XAUUSD technical analysis

Analyzing the daily gold chart, a significant U.S. rate cut has been decided, and the rate cut cycle has begun. The rate cuts on the U.S. dollar, the world’s reserve currency, have a major impact. Previously, the high interest rate appeal of the U.S. dollar attracted funds, but as the rate cuts proceed, money is more likely to flow into gold.

Gold has risen to the $2600 USD level. It has gained for two consecutive days, closing with a strong bullish candle. The upward pressure is very strong, driven by rate cuts. Additionally, central bank gold acquisitions and the seasonal year-end demand for gold are likely to sustain the upward trend. The instability in the Middle East is also a factor contributing to the rise of gold.

According to the N-measurement method for price range calculation, the target price is $2740 USD. It is supported by the 52-day MA and is aiming for the upper band of the rising channel.

Day trading strategy (1 hour)

Analyzing the 1-hour gold chart, in the past, after reaching a new major level, there has been a tendency for a correction sell-off. This time as well, after rising to the early $2600 USD level, there is a high possibility of a corrective sell-off.

Last week’s close was above the 10-day moving average, but if it falls below the 10MA, there is a good chance it will drop to around $2600 USD. Support levels are at $2590 USD and $2530 USD.

Since the fundamentals suggest a strong buy, I recommend a buy-on-dip strategy. The day trading plan would be to buy at $2585 USD and close at $2615 USD. If it drops below $2580 USD, stop. Wait again for a correction to $2530 USD.

Support/Resistance lines

The following support and resistance lines should be considered moving forward:

• $2635 USD: Monthly resistance
• $2561 USD: Daily Fibonacci 61.8%

Market Sentiment

XAUUSD: Sell: 76% Buy: 24%

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*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.