Gold Market Analysis:

Spot gold prices saw a modest rise in early Asian trading on Wednesday, October 2nd, hovering around $2658.91 per ounce, retaining most of the gains from the previous day.  Fueled by safe-haven demand, gold prices jumped over 1% on Tuesday, reaching a high of $2673.01 per ounce and closing at $2663.22, a nearly $30 increase from Monday's close. This surge followed Iran's launch of 200 ballistic missiles towards Israel, escalating fears of a full-blown war in the Middle East.

Iran's missile attack on Tuesday was in retaliation to Israeli strikes against its Hezbollah allies in Lebanon. Israel has vowed a "painful response" to its enemies.

Major General Hossein Salami, the commander of Iran’s Islamic Revolutionary Guard Corps, stated that the operation on the night of October 1st targeted "the heart of the Zionist regime".  This heightened geopolitical tension, coupled with the US Federal Reserve's accommodative monetary policy, has propelled gold to record highs. In the third quarter of 2024, gold has risen by over 13%, its best performance since early 2020, marking four consecutive quarters of gains. Last Thursday, gold reached a historic high of $2685.49, primarily driven by the Fed's half-percentage-point rate cut and the outbreak of conflict in the Middle East. However, it is crucial to be aware of the potential for a pullback as the gold price rally faces resistance.

Today's focus will be on the release of the US September ADP employment change report, often referred to as "Little Nonfarm." The market anticipates an increase of 120,000 jobs, compared to the previous figure of 99,000. Additionally, keep an eye on speeches by Federal Reserve officials.

Gold Technical Analysis:

Daily Chart:  The sharp rebound in gold prices yesterday has formed a bullish engulfing pattern on the daily chart, a strong signal in an uptrend, indicating significant support. The short-term moving averages are currently aligned in a bullish configuration, and the MACD indicator remains in a bullish crossover state. This suggests a potential retest of the all-time high, pending this week's key economic data releases.

4-Hour Chart:  Following a continuous rebound, the current momentum has forcefully reversed the previous decline, with gold prices reaching above $2670. This demonstrates the sustained strength of the bulls. While the short-term decline will not affect the overall trend, it's important to note that the short-term moving averages haven't fully caught up, and the MACD indicator has returned near the zero line. Therefore, it is advisable to prioritize buying on dips and exercise caution when chasing long positions at high levels.

Overall:  Today's short-term trading strategy for gold suggests prioritizing selling on rallies and buying on dips. Key resistance levels to watch are 2672-2675, while key support levels are 2622-2624.

Gold Resistance Levels: 2655, 2660, 2670, 2675

Gold Support Levels: 2610, 2615, 2620, 2630

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.