The XAU/USD pair continues its strong upward trend, started at the end of last week. The price of gold gains support from US macroeconomic statistics.
In particular, Retail Sales ex Autos declined by 0.3% in monthly terms in September, while a 0.1% decline was expected. On a year-over-year basis, the indicator declined by 1.1% against a 0.8% decline in August.
Producer Price Index came in significantly below the forecast and fell by 0.5% and 1.1% in monthly and yearly terms, respectively, that also added pressure to the USD.
Weak macroeconomic statistics lower the chances the Fed would increase interest rates as early as this year that remains the main factor, affecting the US currency.
Support and resistance
Bollinger Bands indicator on the daily chart continues moving up. The price range is widening actively, but the price is still out of its borders. MACD is growing and keeping a strong buy signal. Stochastic is in the overbought zone and trying to turn down.
According to the indicators, a decline is possible in the short term; however, an upward trend is likely to continue in the long term.
Support levels: 1181.44 (15 October morning session low), 1174.70, 1169.81, 1166.20, 1156.40, 1153.46 (near 13 October local lows), 1148.43, 1141.60.
Resistance levels: 1188.10 (29 June high), 1190.00 (near 14 October local high), 1194.20, 1196.10, 1200.00 (strong psychological level).
Long positions can be opened after the breakout of the level of 1190.00 (with appropriate indicators signals) with targets at 1194.20, 1196.10 and stop-loss at 1185.00. Validity – 1-3 days.
When the price turns down near the level of 1190.00 and breaks down the level of 1180.00, short positions can be opened with the target at 1167.20 and stop-loss at 1186.00. Validity – 2-3 days.