Gold Market Analysis:

Gold prices were range-bound in early Asian trade on Wednesday, October 16th, trading around $2660.40 per ounce.  Gold prices rose 0.5% on Tuesday, reaching a one-week high of $2668.80 per ounce and closing at $2662.55, supported by a retreat in US Treasury yields as investors awaited further data that could provide clues on the Federal Reserve's monetary policy trajectory.

The yield on the 10-year US Treasury note fell more than 2%, its biggest one-day drop in over two months, after weak New York State manufacturing activity data, making non-yielding gold more attractive. However, the US dollar hovered near its highest level in more than two months, keeping gold bulls cautious.

The US dollar index closed nearly flat at 103.18 on Tuesday, not far from Monday's peak of 103.36, its highest since August 8th. The dollar strengthened against most major currencies on Tuesday, resuming its recent rally that pushed it to a more than two-month high, fueled by expectations that the Fed will gradually reduce interest rates over the next year and a half.

Market participants will be watching the US import price index for September due later today. Recent comments from Fed officials, including Chairman Jerome Powell, suggest that the central bank's focus has shifted from combating inflation to maintaining labor market stability, while also adopting a cautious approach to future rate cuts. Investors will also be looking to Thursday's retail sales data, industrial production figures, and weekly jobless claims for September for further clues on consumer health.

Gold Technical Analysis:

Daily Chart:Following a period of consolidation and upward movement, gold prices have now firmly established support at the $2650 level.  This has led to a bullish alignment of the moving averages, which should provide support going forward. However, the MACD indicator remains in a bearish crossover, potentially limiting further upside. The previous high in the $2675-$2680 range will be a key resistance zone to watch.

4-Hour Chart:Gold's price action on Tuesday was volatile, with prices briefly dipping below $2640 before finding support and rebounding sharply, ultimately returning to its starting point. This has created a potential bottoming pattern.  The short-term moving averages are now sloping upwards, and the MACD indicator is in a bullish crossover above the zero line, suggesting that the bulls are regaining control. A strategy of buying on dips is recommended.

Overall:The short-term outlook for gold favors selling on rallies with selective buying on dips.

Key Resistance Levels: 2670, 2675, 2680, 2690

Key Support Levels: 2655, 2650, 2645, 2640

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