Current trend

The XAU/USD pair is practically unchanged, holding near 1860.00. At the same time, the instrument maintains a confident signal for corrective growth, which has been trying to form since the end of last week. Quotes are supported by rising geopolitical tensions in the Middle East. Trading participants are concerned about the aggravation of the situation around Israel and the Hamas group, which could significantly change the dynamics of global inflation and lead to another round of rising energy prices.

However, the US currency is also in demand as a safe-haven asset, while generating income, given the high level of interest rates from the US Federal Reserve. The active opening of new long positions in the dollar is constrained by expectations of the publication of inflation statistics in the US this week. Tomorrow, September data on Producer Price Indices will be presented: the Core PPI excluding Food and Energy could add 0.2% in monthly terms and 2.3% in annual terms after 0.2% and 2.2% in the previous month. On Thursday, investors' focus will shift to statistics on consumer inflation, which may adjust from 4.3% to 4.1% in annual terms, and in monthly terms it may remain at 0.3%. Also, during the week, markets will evaluate the September minutes of the US Federal Reserve meeting, which can either strengthen or weaken expectations of another interest rate increase by the regulator by 25 basis points.

Support and resistance

On the D1 chart Bollinger Bands are trying to reverse horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD has reversed to growth having formed a strong buy signal (located above the signal line). Stochastic shows more confident growth; however, it is quickly approaching its highs, indicating the risks of gold being overbought in the ultra-short term.

Resistance levels: 1869.49, 1880.00, 1892.75, 1900.00.

Support levels: 1857.49, 1850.27, 1840.00, 1828.22.

Trading tips

Long positions can be opened after a breakout of 1869.49 with the target of 1892.75. Stop-loss — 1857.49. Implementation time: 2-3 days.

A rebound from 1869.49 as from resistance, followed by a breakdown of 1857.49 may become a signal for opening of new short positions with the target at 1840.00. Stop-loss — 1869.49.