Technical Analysis

GOLD Price Analysis – Oct 03, 2023

By LonghornFX Technical Analysis
Oct 3, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold, represented as XAU/USD, has been on the downward trend for seven consecutive days, hitting its lowest point in almost seven months. However, this bearish trend is mainly attributed to the Federal Reserve's hawkish outlook, surging US bond yields, and the robust performance of the US dollar. It is worth noting that the Federal Reserve has warned about ongoing inflation, signaling the possibility of at least one more interest rate hike in 2023. Hence, their reaffirmation of the "higher-for-longer" stance has added to market concerns, intensifying the downward pressure on gold's value.

Furthermore, the robust macroeconomic data from the United States strengthens expectations of additional tightening measures by the Federal Reserve. In the meantime, the sustains higher US Treasury bond yields and propels the US Dollar to its highest point since November 2022, diverting investment flows away from the non-yielding gold.

In contrast to this, the mild weaker mood in the stock markets provided some backing for the safe-haven gold, helping to limit losses as per the daily chart, which showed extremely oversold conditions. Nevertheless, the overall situation implies that the XAU/USD pair is more likely to head lower, and any significant recovery could be viewed as a chance for bearish traders to enter the market.

Gold Prices Decline Amidst Rate Hike Expectations

It's worth noting that gold prices are currently on their longest losing streak since August 2022 due to growing expectations of more interest rate hikes by the Federal Reserve. Fed officials, including Governor Michelle Bowman and Vice Chair Michael Barr, emphasize the need for continued restrictive monetary policy to control inflation.

Cleveland Fed President Loretta Mester also highlights the risk of higher inflation and the necessity of raising rates. Additionally, strong economic indicators, such as the US ISM Manufacturing PMI and rising consumer spending, indicate a likelihood of further policy tightening. As a result, the US Dollar is consolidating its gains, undermining the gold prices.

Looking forward, traders will pay close attention to the RBA interest rate decision on Tuesday and the US JOLTS Job Openings report later in the day. Later in the week, the focus will shift to US employment data, with the ADP report coming out on Wednesday and the Nonfarm Payrolls on Friday.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

The gold price continues its downward momentum, approaching the anticipated extended target of $1809.35. Market analysts foresee this bearish trend surpassing this benchmark, potentially advancing towards the $1765.20 mark.

Given the prevailing circumstances, the bearish outlook is poised to dominate the near-term landscape, underscored by the downward influence of the EMA50. It's imperative to highlight that any breakthrough above $1838.35 could disrupt this declining trend, ushering in potential intraday recovery efforts. For today's trading, the gold price is projected to oscillate between a support level of $1795.00 and a resistance point of $1830.00.



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