Technical Analysis

GOLD Analysis – October 05, 2021

By LonghornFX Technical Analysis
Oct 5, 20213 min

Eyes on ISM Services PMI from US

Gold prices were closed at $1768.70 after reaching a high of $1771.45 and a low of $1747.85. Gold remained bullish with minor gains on Monday as the U.S. dollar was weak across the board. The U.S. Dollar Index, which measures the greenback's value against a basket of six major currencies, fell for the fourth consecutive session on Monday by 0.3% and reached 93.68 as concerns over higher inflation and a slowdown in economic growth weighed on the firm dollar.

Inflation was not slowing down as initially expected by the Fed, and fears were raised that it could start negatively impacting economic growth, which added pressure on the U.S. dollar and dragged DXY from its highs this week. Whereas the U.S. The Treasury yield on the benchmark 10-year note moved higher on Monday and reached 1.50%.

As expected earlier, the concerns that inflation would be persistent instead of short-lived raised questions about its impact on economic growth, which ultimately added to the risk-off market sentiment. Furthermore, uncertainty in the market continued to increase with the fresh U.S.-China concerns over trade and Taiwan.

On Monday, the Biden Administration criticized China for not fulfilling the clauses of the trade deal signed with the U.S. in the final year of the Trump administration. The U.S. representative in negotiations with China, Katherine Tai, has said that she will hold trade talks with her Chinese counterpart in the coming days to discuss the phase-1 deal reached in 2020 and trade concerns. She added that the U.S. did not want to inflame trade tensions with China, but Beijing had not adhered to all of its purchase commitments.

On the other hand, China blamed the United States on Monday for increased tensions over Taiwan and vowed to smash any separatist plots, as the island reported the largest ever incursion by the Chinese air force. These developments added to the market's uncertainty and supported the risk-off market sentiment that pushed gold higher on Monday.

On the data front, there was no specific macroeconomic data release on Monday. At 19:00 GMT, the factory orders from August remained flat with an expected 1.2%. Investors now await September's U.S. Non-farm payrolls data due on Friday. Additionally, U.S. President Joe Biden said on Monday that the top line of the social safety net package needed to be declined to somewhere between $1.9 trillion and $22 trillion. This also added to the risk-off market sentiment and supported the yellow metal.

GOLD Intraday Technical Level

Support Resistance

1753.89 1777.49

1739.07 1786.27

1730.29 1801.09

Pivot Point: 1762.67

GOLD - Technical Outlook 

On Tuesday, the precious metal gold was trading at $1,756 with a bearish bias. It is getting immediate support at the 1,754 level, which has been extended by an intraday pivot point. Gold has violated the pivot point support level of 1,762, which is now exposing gold towards the 1,754 support level.

On the lower hand, the breakout of the 1,754 level exposes the precious metal towards the 1,747 and 1,739 levels. Further, on the lower side, the violation of 1,739 exposes gold towards the 1,731 level.

On the bullish side, gold’s next resistance stays at the 1,762 level and a breakout of this exposes the pair towards the 1,770 level.

The RSI and Stocahstic are supporting a selling trend in gold, thus, the bearish bias dominates below 1,762 and vice versa. Good luck!


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