Here is the update on XAUUSD today, October 20, 2023. The price of gold (XAU/USD) reached its highest level in nearly three months last Friday, supported by global capital flows into safer assets due to geopolitical tensions in the Middle East.

The Federal Reserve's (Fed) decision to keep interest rates unchanged in November has also contributed to the increase in gold prices for four consecutive days. This marks the fifth rise in the last five days and is unaffected by the surge in U.S. Treasury bond yields.

However, the prospect of further interest rate hikes by the Fed at the end of the year has pushed 10-year U.S. government bond yields close to 5%, the highest level in 16 years. This has spurred demand for the U.S. dollar, and along with the overbought RSI on the hourly chart, caution is warranted for those looking to invest in gold in U.S. dollars. Nonetheless, gold prices continue to show strong gains for the second consecutive week.

Gold prices continue to rise due to tensions in the Middle East:

  • Tensions in the Middle East, particularly between Israel and Hamas, continue to support the rise in gold prices as a safe-haven asset.
  • Israel has launched airstrikes on the Gaza Strip and is considering a large-scale invasion.
  • Israel has also conducted missile attacks in Lebanon and Syria, complicating the situation.
  • Egypt is also affected by the conflict, with attacks on the Rafah border.
  • Federal Reserve Chair Jerome Powell noted the possibility of further rate hikes in response to tight economic and employment conditions.
  • Yields on 10-year U.S. government bonds have reached their highest level in 16 years, impacting the U.S. dollar.
  • Factors such as rising U.S. bond yields, a strengthening U.S. dollar, and overbought indicators on the hourly chart may limit further gains in gold prices (XAU/USD).

Technical Analysis: Gold prices may consolidate before attempting to reach $2,000

From a technical perspective, a breakout above the 200-day SMA this week and movement beyond the $1,947-$1,948 sell zone supports optimistic traders. However, the RSI on the hourly chart indicates an overbought condition, suggesting it may be wise to wait for short-term consolidation before the next rise. Gold prices appear poised to surpass July's peak around $1,987 and attempt to reach the psychological level of $2,000 for the first time since May.

On the downside, the current corrective decline appears to find strong support near the previously breached resistance level of $1,947-$1,948.

This will help limit declines around the 200-day SMA, which is around $1,930. However, a convincing breakout below could trigger technical selling and send gold prices to weekly lows around $1,908, then to the round figure of $1,900. This level also aligns with support from the 50-day SMA, which will serve as a strong foundation for XAU/USD.


Warning!

This explanation of "XAUUSD Today: October 20, 2023 - Rises to 3-Month High" is based on fundamental and technical insights from reliable sources and does not constitute advice or solicitation. Always remember that this content aims to enrich the reader's information. Always conduct independent research on other forex information as a reference for your trading.

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