As forecast in the most likely scenario, gold started testing the 1,515.00 price level. By the middle of Friday's trading, the commodity price was still testing the 1,515.00 level. It was doing so by finding support in the 1,510.00 level.
In general, the metal was expected to trade sideways until the hourly simple moving averages catch up with the commodity price. As that occurs, the short term overbought pressure of gold would gradually disappear.
FOMC Statement and Federal Funds Rate
The Federal Reserve released the US Federal Funds Rate data, which came out in line with the expectations of 1.75%.
According to the official release: "Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent."
Economic Calendar Analysis
On Friday, November 1, the US Employment data set will be on focus - the Average Hourly Earnings, the Non-Farm Employment Change and the Unemployment Rate data will be published at 12:30 GMT.
Also on Friday, the ISM Manufacturing PMI survey results will be published at 14:00 GMT.
Meanwhile, take into account that the next week's reaction tables have been published. Take a look at the 04.11-08.11 Event Historical Reactions publication.
XAU/USD short-term forecast
On Thursday, the XAU/USD exchange rate advanced to the psychological level at 1,515.00. During today's morning, the rate was trading near the given level.
It is likely that the price for gold could reach the upper boundary of the medium-term ascending channel at 1,520.00. If the given channel does not hold, a breakout north could occur.
However, if the given channel holds, it is likely that a reversal south could occur in the nearest future. It this case it is unlikely that the price for gold could drop lower than 1,497.00 due to the support formed by the 55-, 100– and 200-hour SMAs, as well the monthly PP.
Hourly Chart
On the daily candle chart, the commodity price has pierced the lower trend line of the large scale ascending channel pattern. The pattern represents the metal's surge, which has occurred since the start of summer.
It might be the first signal that the surging of the metal is over. Although, the metal has not been reaching new high levels since the start of September.
Daily Chart
Short sentiment increases
On Thursday, 53% of open gold position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Friday's trading session, the sentiment was 55% short.
Meanwhile, in the 1000 base point range around the current metal's price the pending orders were neutral – 52% of orders were to buy and 48% to sell.
On Thursday, 60% of orders were to sell.