Gold Prices See Powerful Monthly Reversal, Setting Stage for Possible Continued Upside
Original analysis by FXS Editorial Team (Source: FXStreet)
Gold prices experienced a dramatic shift in October, forming a powerful bullish monthly reversal that signals an important potential turning point in the broader trend. This technical development has sparked increasing interest among traders, as it could suggest that the previous downtrend may be coming to an end, or at the very least, that a significant correction to the upside is underway.
Gold has historically been viewed as a safe haven asset, sought after during times of geopolitical stress, financial instability, and inflation concerns. While the precious metal had been retreating since its all-time highs, the recent monthly performance indicates that market sentiment may be shifting once again in favor of gold.
Technical Summary and Monthly Chart Patterns
October 2025’s monthly candle shows a strong bullish reversal pattern on gold’s price chart. This type of price action is particularly significant, given that it forms at a potential long-term support level and follows months of declining market sentiment. Key points to note from the chart include:
– October closed with a large bullish candle, effectively engulfing the preceding month’s losses.
– The month’s low was around $1810, while the high reached over $2000, with a close well above $1990.
– This bullish price action reversed two consecutive months of losses, highlighting a potential bottom.
– Gold prices managed to close above key psychological and technical resistance levels such as $1950 and $1980.
– Price broke above the 200-day moving average, which supports the idea of an emerging bullish momentum.
These technical cues lend credibility to the notion that this rally may not be short-lived. Rather than simply a short squeeze or temporary bounce, this could be the beginning of a larger trend reversal, especially as prices reclaim critical territory.
Support and Resistance Levels to Watch
Going forward, traders and investors should pay close attention to the following key levels:
Support:
– $1950: Serves as the first level of support if the price corrects lower.
– $1900: Psychological level that may attract buyers on dips.
– $1875 and $1850: Historical S/R zones that held in the past and could again act as a buying area.
Resistance:
– $2000: Gold’s perennial psychological barrier.
– $2020: Next upside target and recent swing high.
– $2050-$2075 range: If broken, could open the door to retesting all-time highs.
Federal Reserve and Interest Rate Expectations
Part of the renewed interest in gold can be attributed to shifting expectations around monetary policy. Markets are beginning to factor in the possibility that the Federal Reserve is nearing the end of its rate hiking cycle. Traders are watching closely for signs that future rate increases may pause or reverse, which would typically underpin gold’s upside appeal due to the following:
– Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
– If real rates (interest rate minus inflation) begin to decline, gold’s relative attractiveness rises.
– A dovish tilt in Fed rhetoric has historically acted as a tailwind for the precious metal.
In October, this potential policy pivot was hinted at several times by key policymakers, adding to gold’s bullish case. Investors will be monitoring upcoming economic data releases closely, especially inflation and labor market prints, to determine whether the Fed will adopt a more accommodative stance in the coming months.
Geopolitical Tensions and Safe-Haven Flows
Apart from shifting monetary policy dynamics, the prevailing geopolitical environment has also contributed to the increased demand for gold. The following events have created an environment where safe-haven assets such as gold see increased interest:
– Ongoing military tensions in the Middle East
– Friction between major global powers over political and economic issues
– Elevated global debt levels and associated risks to financial market stability
– Concerns over global recession amid slowing growth data from major economies
These factors all
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