Gold Shines Brightly: ECB Rate Cut Anticipated as Geopolitical Tensions Heighten

Gold is consolidating after hitting a fresh all-time high. It hit a high of $2685 yesterday and is currently trading around $2677.

ECB monetary policy-

The European Central Bank (ECB) is expected to lower its deposit rate by 25 basis points, bringing it down to 3.25% today. This is the first time in 13 years that the ECB has made two rate cuts in a row. Many major central banks are cutting rates because of economic worries, and lower inflation is good news for safe-haven assets like gold.

 Geo political tension-

Israel has conducted extensive airstrikes on Hezbollah installations in Lebanon overnight, marking a significant escalation in the ongoing conflict.  Israeli forces targeted over 100 Hezbollah positions across southern Lebanon in a single day.

US dollar index-

The US dollar index has reached a 10-week high as the likelihood of a significant rate cut by the Federal Reserve has decreased. A break above 103.75 would confirm a continuation of the bullish trend.

Based on the CME FedWatch Tool, the likelihood of a 25 basis point rate cut in November has risen to 92.1%, up from 83.30% just a week ago.

Technical (4 hour chart)-

The yellow metal trades above short-term (34 and 55 EMA ) and long-term (200- and 365 Hull MA) in the 4-hour chart.

The near–term support is around $2660, a break below targets $2638/$2624/$2600/$2570/$2560/$2545/$2520/$2470. Major bearish continuation only below $2470.The yellow metal faces minor resistance around $2680 and a breach above will take it to the next level of  $2689/$2700/$2713.

Indicator (4- hour chart)

CCI (50)- Bullish

Average directional movement Index - Bullish

It is good to buy on dips around $2660 with SL around $2638 for TP of $2710.