XAU/USD 240 Minute Chart Analysis

Gold prices (XAU/USD) experienced a mild rebound, climbing from weekly lows near $1,950 during early Asian trading hours on Wednesday. This rebound coincided with a period of consolidation in the US dollar (USD).

While the US Dollar Index (DXY), which measures the USD against major currencies, hovers around 106.25, the gold market remains cautious due to the continued rise in US Treasury bond yields. These rising yields pose a potential headwind for the non-yielding precious metal.

On Tuesday, US Purchasing Management Index (PMI) data exceeded expectations. The flash Composite PMI for October rose to 51.0 from 50.2, with the Services PMI reaching 50.9 and the Manufacturing PMI hitting 50.0. This marked the first time in six months that manufacturing did not fall below the 50 threshold. Additionally, the Richmond Manufacturing Index for October dropped to 3 from the previous reading of 5, falling short of market expectations. The positive US economic data eased concerns that tighter monetary policy and higher borrowing rates would hinder investment and industrial activity.

In contrast, escalating geopolitical tensions in the Middle East have the potential to boost safe-haven assets, including gold. Traders are closely monitoring the preliminary estimate of US Q3 Gross Domestic Product (GDP) set for Thursday and the US Core Personal Consumption Expenditure Index (PCE) to be released on Friday. These data points will likely guide trading decisions surrounding gold prices (XAU/USD).

From a technical standpoint, gold is currently in a bullish trend but is range-bound around the $1,975 level. Traders should exercise caution, as the market may experience a pullback and potentially test the $1,950 support level. Gold’s price is currently positioned above the 200-day and 50-day moving averages, indicating a bullish range market.

If the price declines from its current level, it may test support levels at $1,963, with further downside potential to the $1,954 level. A deeper bearish move could target levels at $1,946 and $1,940, with $1,931 acting as a major support level. Alternatively, if the price moves higher from its current level, it could test resistance at $1,980, then target the $1,983 level as the primary resistance. Further resistance levels to monitor include $1,989, $1,991, $1,997, and $2,001, all of which are significant levels acting as uppermost resistance.

In the short term, market momentum favors a bullish outlook. However, traders should remain cautious, as the market could potentially range between $1,940 and $2,000 in the coming days.