• Gold hits important resistance as geopolitics remain on the forefront

• GBP/USD has weak technical outlook ahead of key data releases

• AUD/USD supported near October low; technical picture still fragile

 

Israel-Hamas war --> Gold

In response to Israel's warning, investors sought safety in gold, driving the precious metal up by 3.0% to $1,932 and near its 200-day simple moving average (SMA).

The risk of escalation remains intact as the timing of a possible invasion remains unclear while clashes with Lebanon’s Hezbollah militants intensify and Iran’s engagement is not ruled out.

US officials, including President Biden, want a less harsh retaliation to Hamas attacks. If the situation deteriorates this week, the precious metal may try to rise above the 1,940 barrier. Then, the focus could turn to the 1,975 resistance, while a more exciting bull run could reach the 2,000 psychological level.

UK data --> GBP/USD

In Europe, the calendar will mainly include UK data releases. On Tuesday, the employment report is expected to show a third month of job cuts (-197k) and a steady unemployment rate near a two-year high of 4.3%. Growth in average earnings is forecast to ease to 8.3% y/y but remain among the highest levels in two years. Should the data arrive weaker-than-expected, further reducing the need for another rate hike, GBP/USD could retest the 1.2100 on the downside or possibly meet October’s low of 1.2036.

If the decline becomes steeper, it could drive the pair towards the key 1.1965 support zone. But traders may not react forcefully until the UK CPI inflation data comes around on Wednesday at 06:00 GMT. Forecasts suggest a softer print of 6.5% y/y and a slightly higher monthly increase of 0.4% y/y. The bears could take the upper hand if the figures continue to decelerate towards the BoE’s target.

The US factor could be another important market mover for GBP/USD. US retail sales for September are forecast to erase a two-month progress on Tuesday. Yet, a speech by the Fed chief Jay Powell on Thursday and comments from board members could generate stronger volatility if central bankers send new signals about future rate hikes ahead of the next FOMC policy meeting.

Technically, the pair keeps trading within bearish territory and below important resistance levels. A decisive rally above the 1.2500 region is still needed to improve the short-term outlook.

China GDP --> AUD/USD

Last but not least, China’s GDP growth figures should not be missed on Wednesday as the world’s second largest economy has been progressing at a notable pace over the past year despite its Q2 growth of 6.2% y/y felt moderately short of expectations. Analysts have set their projections lower at 4.4% y/y for Q3. If China's GDP exceeds expectations, the currencies of Australia and New Zealand, which are influenced by China, may experience a rebound.

Specifically, AUD/USD could secure the floor at 0.6283 and bounce up to 0.6430 if the 0.6330 nearby resistance proves easy to pierce. Still, from a technical perspective, the pair has not entirely eliminated downside risks, suggesting that a drop to 0.6200 might not be a big surprise.