October 27, 2022 12:00 AM ET
By: AnalysisWatch
The price of gold (XAU/USD) is broadly trading in a limited range as market participants await fresh impetus for a unilateral move. The precious metal came under slight selling pressure at around $1,670.00 but recovered from $1,660.00 and has returned to the woods. The balanced auction profile is drawn up in a range of $1,660.00 to $1,671.20.
Meanwhile, the U.S. Dollar Index (DXY) has seen some mild buying interest at around 109.60 but is still in a tight trading range. Yields on 10-year U.S. Treasury bonds have recovered marginally after falling below the psychological support of 4%. Market sentiment is extremely quiet as investors have shifted to the sidelines ahead of U.S. gross domestic product (GDP) and durable goods orders data.
Despite the Federal Reserve's (Fed) rate hike, U.S. GDP is expected to post a 2.4% growth rate in the third quarter of CY2022, compared to a 0.6% decline previously reported.
U.S. new orders for durable goods are also expected to perform better than expected, growing 0.6% versus a 0.2% decline. It is worth noting that core inflation data has been rising in recent months and continues to point to solid household demand.
Gold prices are moving in a symmetrical triangle, indicating a significant reduction in volatility. An explosion in the volatility contraction pattern will lead to broader ticks and high volume. Horizontal resistance is at the October 11 high at $1,684.05.
The 20-period Exponential Moving Average (EMA) at $1,633.16 acts as key support for the price.
The Relative Strength Index (RSI) (14) has fallen out of the bullish 60.00–80.00 range. However, the upward trend is still solid.