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• Gold and Silver prices reach new highs amidst a rising US Dollar, driven by global uncertainties and a potential Trump Presidency.
• Silver’s demand/supply dynamics bode well for further gains.
• The US Dollar Index (DXY) strengthens due to positive economic data and fading rate cut expectations, with a potential rise to 105.00.

Gold prices have smashed through the 2750 handle despite the US Dollar continuing its advance. The precious metal has attracted bids with some believing this could be down to markets preparing for a potential Trump Presidency in the US.

There does not appear to be a single factor driving Gold prices but rather a combination of rising uncertainties for global market participants to consider. Global conflicts, trade wars and a potential Trump Presidency are at the forefront and that is leaving out the uncertain economic situation in many countries.

Despite sky high stock prices in the US and what seems to be improving sentiment, Gold, a notorious safe haven bet reveals a different story. Gold prices have been on a tear this year and with many people still viewing the precious metal as a safe haven, are market participants telling us something?

Silver (XAG/USD) Demand/Supply Dynamics Bodes Well for Bulls

A commodity that has flown under the radar of late has been silver, as prices soared to new all time highs. Silver is trading in the mid 34’s at present with market analysts noting that more gains could be in store for silver prices.

Looking more closely at Silver, the appeal is quite evident. Silver is used in a host of electronic products manufactured today and the rise of tech is only going to increase the demand for silver.

Given the physical shortage already present in silver markets there is a huge possibility that the rally could continue. Looking at the chart below, you can see the huge discrepancy between demand (blue line) and supply (white line) which I expect will underpin prices moving forward.

Source: LSEG Workspace

US Dollar Index (DXY) Eyes a Rise to 105.00 Key Level

The US Dollar continues its rise on positive data and fading rate cut expectations. Markets have been digesting comments from Fed Policymakers over the last week or so which has largely leaned on the hawkish side.

As markets adapt to fewer anticipated rate cuts in the US compared to more aggressive cuts by other central banks, the US Dollar may be set to keep rising. There is growing talk of a ‘Trump trade’ as US Treasury yields have experienced some interesting swings off late. This may be another area to focus on when looking at the greenback moving toward the US election.

US Dollar Index (DXY) Daily Chart, October 23, 2024

Source: TradingView

Technical Analysis Gold (XAU/USD)

From a technical analysis standpoint, Gold continues to print fresh highs and languish in overbought territory. As we know markets are able to languish in overbought territories for extended periods of time and thus the Gold rally could continue.

Gold is currently flirting with the key level at 2750 with a drop lower opening up a retest of the support area at 2739. Lower down we could look at areas of support around 2724 and 2714.

The upside provides us with less insight with today’s highs at 2758 an area to keep an eye on before the psychological level at 2775.

GOLD (XAU/USD) Four-Hour (H4) Chart, October 23, 2024

Source: TradingView (click to enlarge)

Support

• 2739
• 2724
• 2714

Resistance

• 2758
• 2775
• 2800

The Japanese yen has posted sharp losses on Wednesday. In the European session, USD/JPY is trading at 152.67, up 1.06% at the time of writing. The yen is down 2.1% this week and has plunged 6.3% in October.

IMF slashes Japan’s growth forecast

The International Monetary Fund slashed its 2024 growth forecast for Japan to just 0.3%, down sharply from the 0.7% forecast in June. This is the lowest estimate since 2020, during the Covid-19 pandemic which severely impacted the economy. The IMF highlighted the “fading of a one-off boost” in tourism and disruptions in auto supply chains. Japan’s economy grew 1.7% in 2023, aided by a strong increase in tourism.

The IMF said it expects the economy to rebound in 2025 and expand 1.1% as private consumption and wage growth improve, assuming that the Bank of Japan continues to raise rates “toward a neutral setting of about 1.5%.”

The BoJ raised interest rates out of negative territory in July to the current rate of 0.25%. The markets are expecting further hikes but the central bank has been very cautious and wants to see evidence of sustainable inflation at 2% before making additional hikes. This has made the BoJ an outlier among major central banks, most of which are in a rate-cutting cycle in response to falling inflation. Japan releases Tokyo Core CPI, a key inflation indicator, on Thursday. The indicator is expected to ease to 1.7% in September, down from 2% in August.

The BoJ meets on Oct. 30-31, right after a general election on Oct. 27. The Bank will likely maintain policy settings but the markets will be keeping a close eye on the quarterly projections for inflation and growth.

USD/JPY Technical

• USD/JPY has pushed above several resistance lines today and the next resistance line is 153.19
• 150.93 and 150.66 are providing support

The USD/JPY currency pair surged to near three-month highs, hitting 151.79, driven by the strengthening US dollar and rising US government bond yields. The appreciation of the US dollar was supported by favourable macroeconomic data from the US and ongoing demand for safe-haven assets in anticipation of the upcoming US elections.

Japan's political landscape is uncertain as it approaches its general elections this weekend. Preliminary polls indicate that the ruling Liberal Democratic Party could potentially lose its majority, intensifying concerns over political stability and the future direction of the Bank of Japan's monetary policy. Such political uncertainties further diminish the prospects of the Japanese yen regaining strength against a robust US dollar.

The current environment suggests that the Bank of Japan is unlikely to intervene effectively under these conditions. Market expectations are that any attempts at intervention would be futile against the prevailing strong demand for the dollar. The yen's fate now heavily depends on the outcome of Japan's elections and the subsequent actions of the Bank of Japan, particularly regarding interest rate decisions.

Technical analysis of USD/JPY

The USD/JPY has established a narrow consolidation range around 150.85 and has broken upwards, continuing its ascent towards the 152.52 target. Once this level is reached, a potential corrective move back down to 150.85 may occur, testing this level from above before another likely ascent to 152.72. The MACD indicator supports this bullish pattern, with its signal line well above zero and sharply upwards, indicating strong upward momentum.

On the hourly chart, USD/JPY has developed a growth structure towards 152.85. Following the achievement of this level, a corrective phase towards 150.85 is anticipated, with an initial correction target set at 151.70. The Stochastic oscillator further underscores this potential pullback, with its signal line positioned above 80 but poised to descend towards 20, suggesting an imminent downward adjustment before further gains.

The dollar remains in strong bullish acceleration for the third consecutive day, boosted by expectations that Trump’s victory in the US presidential election would boost the economy and ease pressure on Fed, while fading expectations for aggressive rate cuts in coming months, added support the US currency.

The dollar index, which tracks performance of US Dollar against the basket of major currencies, broke above 104.00 barrier and rose to eleven-week high on Wednesday.

Bulls eye targets at 104.38/54 (Fibo 76.4% of 105.78/99.84 / July 30 lower top, violation of which to open way towards 105.78 (June 28 peak).

Meanwhile, negative signals are developing on daily chart (bullish momentum is fading and RSI is overbought) and suggest that bulls may start losing traction in coming sessions and pause for consolidation.

Bullish structure of daily studies (multiple MA bull-crosses / strong positive momentum) suggest that larger bulls hold grip, and corrective action should be limited.

Broken 200DMA / Fibo 61.8% (103.57/51) should provide firm ground and prevent deeper pullback towards 103.00/102.80 zone.

Res: 104.38; 104.54; 105.00; 105.47.
Sup: 103.90; 103.57; 103.33; 103.00.

Strong acceleration higher in Asian / early European trading on Wednesday (the pair was up 1%) pushed the USDJPY’s price to new multi-week highs, last traded in late July.

Recent break of psychological 150 barrier was followed by emerge from thick daily Ichimoku cloud and lift above next pivot at 150.76 (100DMA / 50% retracement of 161.95/139.57 descend) set the scope for acceleration through 200DMA (151.36) and round-figure resistance at 152.00.

The Dollar received fresh boost from revised view on Fed monetary policy towards gradual rate cuts, while markets keep an eye on US presidential elections, as growing expectations of Trump’s victory mark another supportive factor for the dollar.

Daily close above 200DMA to confirm fresh bullish signal for further advance, with Friday’s close above rising weekly cloud, to validate strong bullish structure.

Bulls pressure target at 153.40 (Fibo 61.8%) but may face headwinds as daily studies are overbought.

Shallow dips to mark positioning for further advance with 200DMA now acting as initial support (151.36), followed by broken Fibo / 100DMA / daily cloud top (150.70 zone) where dips should find a footstep and keep intact pivotal 150 support, reinforced by 10DMA.

Res: 150.00; 150.76; 151.00; 151.40.
Sup: 149.16; 149.00; 148.86; 148.12.

EURUSD dipped below psychological 1.08 support and hit new multi-week low in early Wednesday.

Larger bears remain firmly in play and reinforced by the most recent formation of 10/200DMA death cross, with daily close below 1.08 to reinforce bearish stance.

However, oversold RSI and 14-d momentum in sideways mode suggest that the downtrend may be running out of steam.

Bears approached support at 1.0777 (Aug 1 higher low) and eye another significant point at 1.0745 (Fibo 76.4% of 1.0601/1.1214 uptrend) where fresh headwinds could be expected.

Upticks are likely to be limited and provide better selling opportunities, with broken Fibo 61.8% (1.0835) to ideally cap and potential extended upticks to stay below 200DMA (1.0870, also Oct 17/21 lower platform) to keep larger bears intact.

Break of 1.0745 pivot to open way for test of 1.0670 zone (June higher base) and unmask key med-term support at 1.0601 (2024 low, posted on Apr 16).

Res: 1.0800; 1.0835; 1.0870; 1.0907.
Sup: 1.0777; 1.0745; 1.0700; 1.0676.

In mid-October, the Nikkei 225 index attempted to break through the psychological barrier of 40,000 points but ultimately reversed direction.

This week, the index has continued its downward trend, driven by concerns surrounding the upcoming elections for Japan's House of Representatives scheduled for October 27. According to Reuters, the ruling Liberal Democratic Party (LDP) and its coalition partner, Komeito, may lose their majority in the elections.

Meanwhile, technical analysis of the Nikkei 225 chart reveals several bearish indicators:

→ The lower bounds of both the previously active blue and purple ascending channels have acted as resistance, along with the noted 40,000 level.

→ The price has broken below the ascending trend line (marked in red) around 39,000, suggesting that bears have gained enough strength to push through. Consequently, the 39,000 level may now serve as resistance.

Overall, the situation appears increasingly concerning. Could the rise from point V to C be merely a corrective move following the downward impulse from A to B? If so, a downward reversal from 40,000, coupled with a bearish breach of the trend line, could signal a resumption of the downtrend, potentially leading to a decline towards the 37,000 level, which has previously interacted with the price on multiple occasions.

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Market Picture

The crypto market is developing a correction at a moderate pace. It has lost 1.3% more over the last day to $2.31 trillion, down around 3% from the recent peak. At the same time, the sentiment of greed persists. The corresponding index is in the 70-73 range for the eighth day.

Ethereum continues to lose market share to Bitcoin and other altcoins. As a result, BTC’s share of all cryptocurrency capitalisation has risen to 57.3%, the highest since April 2021.

But that doesn’t necessarily mean an upward trend for the top cryptocurrency, which has pulled back below $67K, losing 1% in the last day and nearly 4% from its peak on 21 October. The price is now close to a local support level at $66.8K. A break of this support will open the way for a deeper correction to $65.5K, near the 61.8% retracement level from the last rally and the late September top.

News Background

Options traders have increased bets on Bitcoin to rise above $80K following the US election. Donald Trump, who is seen as more friendly to cryptocurrencies, has an estimated 63.5% chance of winning.

QCP Capital sees a high probability that Ethereum will break through the $2800 resistance level and reach $3000 as the US election is just two weeks away.

According to media reports, Indian authorities are considering significantly restricting or outright banning private cryptocurrencies, as unlike CBDC, they do not meet the requirements of financial inclusion and security.

German-listed mining company Northern Data is considering selling its Bitcoin mining division, Peak Mining, to focus on AI.

The Bitcoin miner, which mined its first coins on 13 January 2009, has sold a total of $9.6 million worth of BTC, according to Arkham Intelligence. That old whale still has 1,077 BTC worth $72.4 million.

The US S&P500 and Dow Jones indices closed lower on Monday and Tuesday. The Nasdaq100 followed suit yesterday. The Russell 2000 index of small public companies lost for four consecutive sessions. There are signs that we are now seeing the beginning of a correction like the one we saw in August, and there is also the risk of a bear market beginning.

CNN’s Fear and Greed Index has been mostly in the 70-75 range since late September – on the cusp of extreme greed. A market correction often accompanies a pullback from current highs into neutral territory.

The VIX volatility index jumped above 20 in early October, indicating heightened nervousness, which is unusual in situations where historical highs are being systematically updated. Historically, however, current levels are lower than typical for this time of year, although slightly higher than in US presidential election years.

Let’s look at the dynamics rather than the absolute levels of the VIX. We are entering an important period of highest volatility, covering the week before and the week after the election. Volatility is often synonymous with falling markets.

This decline also looks logical, given the typical pre-election uncertainty. This time, it is prolonged in the US due to a very close race between the candidates, with no clear winner yet. Separately, we look at the RSI and price divergence for the S&P500: the price is well above the July peak, while the Relative Strength Index peaked at 70 at the beginning of last week and has already fallen back to 59.

The risks for financial markets in the coming weeks are, therefore, tilted to the downside. Using the Fibonacci pattern, the 5600-5700 area for the S&P500 is a potential correction target if the markets do not dig deeper.

Gold price started a fresh surge above $2,720. Crude oil is recovering and might rise toward the $73.85 resistance zone.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a strong increase from the $2,645 zone against the US Dollar.
• A major bullish trend line is forming with support at $2,735 on the hourly chart of gold at FXOpen.
• Crude oil is recovering losses and trading above the $70.50 support.
• There was a break above a connecting bearish trend line with resistance near $70.00 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price formed support near the $2,645 zone. The price remained in a bullish zone and started a fresh increase above $2,680.

The bulls even pushed the price above the $2,720 level and the 50-hour simple moving average. Finally, it traded to a new all-time high at $2,748. The price is now consolidating gains near the $2,745 zone and the RSI is above 50.

Initial support on the downside is near a major bullish trend line at $2,735 and the 50-hour simple moving average. The next support sits near the 23.6% Fib retracement level of the upward move from the $2,645 swing low to the $2,748 high at $2,725.

The first major support is near the $2,700 zone or the 50% Fib retracement level of the upward move from the $2,645 swing low to the $2,748 high.

If there is a downside break below the $2,700 support, the price might decline further. In the stated case, the price might drop toward the $2,670 support. Immediate resistance is near the $2,748 level. The next major resistance is near the $2,750 level.

An upside break above the $2,750 resistance could send Gold price toward $2,765. Any more gains may perhaps set the pace for an increase toward the $2,780 level.

WTI Crude Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price found support near the $68.15 zone against the US Dollar. The price formed a base and started a recovery wave above $70.00 and the 50-hour simple moving average.

The bulls were able to push the price toward the 50% Fib retracement level of the downward move from the $75.61 swing high to the $68.13 swing low. Besides, there was a break above a connecting bearish trend line with resistance near $70.00.

The hourly RSI is near the 70 level, but the price is struggling near $71.85. The next resistance is near the 61.8% Fib retracement level of the downward move from the $75.61 swing high to the $68.13 swing low at $72.75.

A clear move above the $72.75 could send the price toward the $73.85 resistance. Any more gains might send the price toward the $75.60 level. Conversely, the price might start a fresh decline from the $71.85 resistance.

Immediate support sits near the $70.50 level. The next major support on the WTI crude oil chart is $68.15. If there is a downside break, the price might decline toward $66.00. Any more losses may perhaps open the doors for a move toward the $65.00 support zone.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.