Gold price corrects from multi-week high on profit-taking, downside seems limited

• Gold price kicks off the new week on a weaker note and reverses a part of Friday’s rise to a multi-week high.
• Failure to find acceptance above the 200-day SMA prompts some profit-taking amid elevated US bond yields.
• Israel-Hamas conflict and dovish Fed expectations should help limit any meaningful downfall for the XAU/USD.

Gold price (XAU/USD) rallied to over a three-week high, around the $1,932-1,933 area on Friday in the wake of the intensifying Israel-Hamas conflict, which forced investors to take refuge in traditional safe-haven assets. Apart from this, expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle provided an additional boost to the non-yielding yellow metal.

Bulls, however, struggled to capitalize on the momentum beyond a technically significant 200-day Simple Moving Average (SMA). This, along with elevated US Treasury bond yields, prompts some profit-taking around the Gold price and leads to a fresh leg down during the Asian session on Monday. The downside, however, seems limited amid a subdued US Dollar (USD) price action.

Traders might also prefer to wait for fresh cues about the Fed's future rate-hike path and important macro releases from China – the world's second-largest economy – before placing fresh directional bets around the Gold price.

Daily Digest Market Movers: Gold price might continue to attract haven flows amid Israel-Hamas conflict

• Gold price rallied nearly 3.5% on Friday and recorded strong gains of over 5.2% for the week – the most since March.
• An escalation in conflict between Hamas and Israeli troops provided a strong boost to the safe-haven XAU/USD.
• The evacuation deadline issued by the Israeli military to the residents of northern Gaza has already been exhausted.
• The Israeli military has positioned armoured vehicles and could launch a large-scale ground assault in the Gaza Strip.
• The Israel Defence Force (IDF) had announced that they are prepared for a coordinated attack involving air, ground, and naval forces.
• Meanwhile, Iran warned of far-reaching consequences if Israel's bombardment was not stopped.
• Israel also faces the possibility of a separate conflict on its northern border with Lebanon after artillery exchanges with the Iran-backed Hezbollah group.
• The markets seem convinced that the Fed will leave rates unchanged for the second consecutive month in November.
• The US consumer sentiment deteriorated in October, though labour market strength could support consumer spending.
• The US bond yields remain elevated as investors are still pricing in one more Fed rate hike move by the year-end.
• Failure to find acceptance above the 200-day SMA prompts some profit-taking around the Gold price on Monday.

Technical Analysis: Gold price could attract fresh buyers near the 100-day SMA, $1,900 mark

From a technical perspective, any subsequent decline is more likely to find decent support near the $1,900 round-figure mark. The said handle coincides with the 100-day SMA and should now act as a key pivotal point. A convincing break below could make the Gold price vulnerable to test the next relevant support near the $1,868 horizontal zone before dropping to the $1,860-1,855 region.

On the flip side, bulls might now wait for some follow-through buying beyond Friday’s swing high, around the $1,932-1,933 zone, before placing fresh bets. The Gold price might then accelerate the momentum towards the $1,945-1,947 heavy supply zone. A sustained strength beyond the latter will be seen as a fresh trigger for bulls and pave the way for a further appreciating move.