Gold Market Analysis:

Gold prices extended their rally in early Asian trade on Monday, October 21st, with spot gold hitting a new all-time high of $2726.21 per ounce. Gold prices surged past the $2,700 mark on Friday, closing at $2722.13 per ounce, driven by escalating tensions in the Middle East, uncertainty surrounding the US presidential election, and expectations of continued monetary policy easing.  Gold gained 2.45% for the week.  Heightened geopolitical risks and concerns about global market stability are prompting investors to seek safe-haven assets like gold.

Israeli airstrikes in Lebanon on Saturday killed at least 16 people and injured 59. Since Israel intensified its campaign against Hezbollah on September 16th, at least 1,802 people have been killed and 9,330 injured.  On Sunday, Hezbollah fired around 200 rockets into Israel.  While Hezbollah frequently launches rockets into Israel from southern Lebanon, casualties and damage are usually limited due to Israel's extensive air defense systems.

Lower interest rates enhance the appeal of non-yielding gold.  The European Central Bank cut interest rates by 25 basis points last week, and markets anticipate similar moves at its next three meetings.  The Federal Reserve cut rates by 50 basis points in September, and according to the CME FedWatch Tool, the probability of a 25 basis point cut in November is 99.3%, while the probability of a 50 basis point cut is 0.7%.  The probability of no change is just 0.7%.

With a light economic calendar today, the focus will be on speeches from Federal Reserve officials and developments in the Middle East.

Gold Technical Analysis:

Daily Chart:While US economic data briefly triggered a pullback in gold prices, the uptrend quickly resumed, with prices surging to near $2,720 on Friday.  With no significant resistance levels above, psychological levels will be key to watch. The MACD indicator has formed a bullish crossover above the zero line, supporting the positive outlook.  A strategy of buying on dips is recommended.

Weekly Chart:Last week's strong rally resulted in a bullish Marubozu candlestick pattern, highlighting the dominance of the bulls.  The break above $2,700 has opened the door for further gains.  While the short-term moving averages are arranged in a bullish sequence, they are some distance away from current prices, suggesting a potential for some consolidation early this week. The $2,700-$2,740 range will be a key area to watch.

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

Key Resistance Levels: 2725, 2730, 2735, 2740

Key Support Levels: 2710, 2700, 2695, 2690

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.