Nvidia and TSMC to unveil first domestic wafer for Blackwell chips, Axios reports
- Gold surged past $4,200 per ounce in October, driven by trade tensions and rare earth export controls.
- Trump’s reassurances eased short-term market fears, but Fed policy, government shutdown, and US-China talks remain key.
- Despite overbought signals, gold still has upside potential; $4,080 per ounce is a key support level.
- Looking for actionable trade ideas to navigate the current market volatility? Subscribe here with up to 50% off with the Flash Sale to unlock access to InvestingPro’s AI-selected stock winners.
Gold’s uptrend picked up speed in October after a slow holiday period. Prices easily broke the $4,000 per ounce level and reached a new record just above $4,200. The rally is mainly driven by the escalation of the trade war, as China, the world’s main producer of rare earth metals, announced export controls.
These materials are crucial for many industries. While this move may be part of ongoing negotiations with the US, the possibility remains that export limits and US retaliatory tariffs could continue, which would worsen the situation.
Trump Eases Concerns, but Markets Follow Their Own Path
President Donald Trump’s reassurance that “everything will be fine with China” helped slow short-term declines in stocks and cryptocurrencies, while gold continued its upward trend. In the coming weeks, investors will focus on three main factors: the Federal Reserve, the government shutdown, and US-China negotiations.
The most optimistic scenario for gold would involve the Fed cutting interest rates at its meeting later this month and signaling another cut in December. On top of that, if US-China talks stall and Beijing increases military pressure on Taiwan, gold could rise to as much as $5,000 per ounce.
The situation in the United States cannot be ignored, as the government has been in shutdown since early October. The longer this standoff continues, the more risk-averse investors are likely to become, which should support demand for gold. Even if the worst-case scenario does not happen, gold still has room to rise despite being technically overbought according to indicators like RSI and Stochastic.
According to the World Gold Council, the current gold bull run has lasted 735 days, compared with an average of 1,062 days for previous bull markets. In addition, gold holdings in ETFs and long positions on the COMEX remain below the highs seen during the start of the COVID-19 pandemic in 2020.
Gold Breaks $4,200 - What’s Next?
Even though the upward trend is still intact, a short-term pullback is possible because the market is overbought. Trying to bet against the trend or catch a falling price in this situation could be very risky.
A safer approach may be to wait for a better entry point along the trend, around the $4,080 per ounce support level, which also lines up with the recent pullback.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.