KVB Market Analysis | 18 Oct: Gold Prices Surge Amid U.S. Election and Middle East Uncertainty

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis:

Due to uncertainty around the U.S. presidential election and the war in the Middle East, investors are seeking safe-haven assets, pushing gold prices higher. Spot gold surged nearly $20, reaching a new all-time high. Despite the rise in the U.S. dollar and Treasury yields, gold prices jumped, driven by the uncertainty surrounding the U.S. election. Along with concerns about the Middle East, the upcoming U.S. election, which is very competitive, adds to the uncertainty. Gold is often seen as a safe investment in uncertain times. On October 17, Israeli media reported that Hamas leader Yahya Sinwar had been killed by the Israeli military. Following his death, Israeli Prime Minister Netanyahu vowed to continue the war.

Technical Analysis:

Gold is showing a strong upward trend. In the short term, buyers could push spot gold prices towards the key level of $2700 per ounce, as the Relative Strength Index (RSI) indicates that momentum is building. The first resistance level for gold is this years high of $2696 per ounce. If this level is broken, gold may rise to $2700, followed by $2750 and $2800 per ounce. On the downside, if prices fall below the October 4 high of $2670, a drop to $2650 is possible. Further decline could lead to support at $2600, with the 50-day Simple Moving Average (SMA) at $2561 per ounce. The overall trend is positive, and closing above $2685.50 suggests that gold may continue higher in the next few sessions, potentially reaching $2700 or even $2720 per ounce.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis:

The USD/JPY rose to the key psychological level of 150, bringing the risk of Japanese intervention back into focus. The pair briefly climbed 0.3% to 150.077, the highest since August 1. After two weeks of losses, the yen fell again as investors adjusted strategies to account for the narrowing yield gap between Japan and the US. The yens outlook has shifted, especially after Japan's new Prime Minister, Shigeru Ishiba, said earlier this month that Japan wasn't ready to raise rates, though he later clarified he would align with the Bank of Japan. Reports from the US indicate a resilient economy, leading markets to expect the Federal Reserve to slow down monetary easing, adding pressure on the yen. The yen's sharp movements have affected businesses and households, requiring close government attention.

Technical Analysis:

The USD/JPY is moving upward and is close to testing the top of the Ichimoku Cloud. Technical indicators show the pair is in an uptrend, but it needs to break above the trend. The RSI has surpassed its last three peaks, signalling stronger buying interest. If the USD/JPY continues rising, buyers will target the 100-day moving average (DMA) at 150.85. After that, the next resistance is the Kumo top and 200-DMA at $151.32, followed by $152.00. On the downside, initial support is at $150.00, followed by $149.00 and at $148.84. Further support is at $146.90 and the 50-DMA at $145.50.

Product: BTC/USD

Prediction: Increase

Fundamental Analysis:

Bitcoin surged past $67,000, reaching its highest dominance level since 2021. Meanwhile, Israel confirmed the killing of a Hamas leader and vowed to continue fighting. U.S. retail sales data exceeded expectations, dampening hopes for significant interest rate cuts. Boosted by positive macroeconomic indicators, Bitcoin hit new all-time highs this week. After a shaky start in early October, Bitcoin has been on an upward trend since October 3. Over the past 14 days, Bitcoin has risen by 16%, marking the highest opening price in 80 days. Bitcoin‘s dominance has climbed to 58.85%, the highest since 2021. This increase in dominance typically indicates capital moving into Bitcoin. Traders may be pulling funds out of altcoins and into Bitcoin, or showing less interest in altcoins. As a result, Bitcoin’s rising dominance is often seen as “bad news” for altcoin prices.

Technical Analysis:

Driven by two key technical indicators on the daily chart, Bitcoin is showing signs of a possible breakout above $70,000. Recently, its price has surged by 16.18% over the past seven days, rising from $58,000 to around $67,400. This rally has placed Bitcoin firmly above a key pivot point, with immediate resistance at $68,900. If Bitcoin breaks this level, it could quickly move towards $70,000 or even higher. The stochastic RSI is currently overbought, with a value above 98, signalling strong momentum but also cautioning traders about potential short-term pullbacks or consolidation. As long as Bitcoin stays above the pivot level of $60,784, the bullish trend remains intact, allowing for further gains. However, on the downside, traders should watch for immediate support at $64,000, as breaking this level could give control to the bears.