GOLD surges on political uncertainty and Fed easing expectations
XAUUSD climbed to a fresh record high in the first trading session of the week, as expectations of an extended rate-cutting cycle by the Federal Reserve (Fed) and a wave of safe-haven assets continued to strengthen the rally.
Spot gold ended the session on Monday (October 20) up 2.47%, equivalent to $104.81, at $4,355.72/ounce, its biggest one-day gain since July. The recovery came after a correction last weekend, when the yield on the 10-year US Treasury bond fell two basis points to 3.991%, dragging the USD down. The US real yield, a measure reflecting the opportunity cost of holding gold, also fell to 1.723%.
The rally suggests the market is “repositioning expectations” as the Fed is expected to maintain its easy policy for the rest of the year. Investors now see a 96% chance of another 50 basis point cut by the end of 2025, according to CME FedWatch data.
In addition to monetary policy factors, the political picture in Washington has also contributed to the demand for gold. The US government entered the 20th day of a partial shutdown, with Congress still unable to reach a budget deal. This situation has delayed important economic data, including the September Consumer Price Index (CPI), clouding the economic picture ahead of the Fed’s policy meeting next week.
Global geopolitical risks continue to play a central role. Fighting between Israel and Hamas in the Gaza Strip has flared up again, threatening to unravel the recently signed ceasefire. Meanwhile, US-China trade talks are set to resume in Malaysia as the November 10 trade war truce deadline approaches. US President Donald Trump is expected to increase pressure on Beijing to cut fentanyl exports and resume soybean imports.
Personally, I believe that the combination of political, interest rate and global trade concerns is pushing gold back to the center of the international financial market. Gold prices could approach $4,500/ounce in the short term, and the possibility of reaching $5,000/ounce next year if political tensions continue to escalate.
With a gain of more than 62% since the beginning of the year, gold is currently the best performing asset among major commodities. The main drivers are strong central bank buying, the trend of de-dollarization of foreign exchange reserves and capital flows into Western gold ETFs.
Amid widespread political uncertainty and a dovish US monetary policy, gold appears to be resuming its historic role as not just a safe haven, but a measure of global confidence in the current financial system.
Technical Analysis
XAUUSDGold's medium-term uptrend remains strong within the uptrend channel, despite a short-term correction around the historical peak of $4,379/ounce. The candle on October 21 showed slight technical selling pressure after a long rally, but the price structure is still above the 21-day moving average (MA21) and has not broken the main uptrend channel.
The Fibonacci correction zones show that the important support levels are located at:
• 4,289 – 4,213 USD/ounce (Fibo 0.236–0.382): the nearest support zone, where buying pressure can return.
• 4,161 USD (Fibo 0.5): the balance level, which also coincides with the previous short-term bottom.
• 4,110 USD (Fibo 0.618): the important support level to preserve the medium-term uptrend.
The RSI is still above 70, reflecting the market in the overbought zone but there is no clear bearish divergence signal. This shows that there is a possibility of a short-term technical correction, but there is not enough sign for a trend reversal.
Overall, the main uptrend is still dominant, with the next target at 4,454 - 4,527 USD/ounce (Fibo extension zone 0.618 - 0.786).
If the price breaks through the 4,110 USD area, the bullish pattern will be temporarily invalidated, then we should observe the reaction around MA21 (~3,940 USD).
Comment: Gold is still in the "trend stability phase" with corrections considered as opportunities for re-accumulation, not reversal signals. Short-term investors should take advantage of technical recovery to optimize entry points, while closely controlling the risk zone below 4,110 USD.
SELL XAUUSD PRICE 4452 - 4450⚡️
↠↠ Stop Loss 4456
→Take Profit 1 4444
↨
→Take Profit 2 4438
BUY XAUUSD PRICE 4300 - 4302⚡️
↠↠ Stop Loss 4296
→Take Profit 1 4308
↨
→Take Profit 2 4314
source https://www.tradingview.com/chart/XAUUSD/ZHUmggYT-GOLD-surges-on-political-uncertainty-and-Fed-easing-expectations/
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