The yield on the 10-year U.S. Treasury note has risen to a 12-week high, and the U.S. Dollar Index has also increased, making gold more expensive for overseas buyers. The yield on the U.S. 10-year Treasury note has surged by more than 10 basis points to 4.192%. The U.S. Dollar Index (DXY), which tracks the value of the dollar against a basket of six currencies, has risen by 0.50% to a two-month high of 104.01.
Analysts have pointed out that although gold prices have retreated from their highs, geopolitical tensions will continue to provide support for gold prices. As a hedge against political and economic uncertainty, gold prices have risen by more than 32% this year and have broken through historical highs on multiple occasions. This is mainly due to the Federal Reserve's rate cuts and the market's demand for safe-haven assets, creating a perfect storm for gold's rise.
As hostilities in the Middle East continue, Israel has revealed that a shell from Lebanon hit an open area in central Israel.
How to trade gold?
Gold prices are expected to extend gains, but the doji pattern may open the door for a pullback. Momentum indicates that buyers still control the market, but the Relative Strength Index (RSI) shows that they are losing some momentum. Although the RSI is bullish, it has flattened.
If gold prices break through the high of $2,740 per ounce on October 21, the next target will be $2,750 per ounce, followed by $2,800 per ounce.
On the other hand, if gold prices retreat from their historical high to below $2,700 per ounce, it may pave the way for further pullbacks. In this case, the first support for gold prices will be the high of $2,696 per ounce on October 17, followed by the high of $2,670 per ounce on October 4.
After testing the resistance of the small bull channel, gold prices have plummeted and are expected to test the channel support line near $2,700 per ounce before rising. A reminder, it is crucial for gold prices to remain above this support to continue the main bullish trend. As long as gold remains bullish, the next target is $2,745.00 per ounce, followed by $2,765.00 per ounce.