Technical Analysis

GOLD Price Analysis – Oct 05, 2023

By LonghornFX Technical Analysis
Oct 5, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold prices (XAU/USD) managed to break their eight-day losing streak and rise during the Asian session on Thursday. Gold prices (XAU/USD) managed to stop their recent losing streak and started rising during the Asian trading session on Thursday. However, the reason for its upticks can be linked to the fact that US Treasury bond yields and the US Dollar (USD) dropped from their recent highs. Investors are now looking for more information about what the Federal Reserve might do next with its policies, and this uncertainty is making them turn to gold for safety.

A report from Automatic Data Processing (ADP) on Wednesday showed that the US job market might be slowing down, and a survey from the Institute for Supply Management (ISM) indicated a slowdown in the US services sector. These signs are giving the Fed a reason to reconsider raising interest rates. As a result, US bond yields are falling, and traders are less confident in the strength of the US Dollar, which is helping gold prices to rise.

Moving on, the significant recovery for gold prices still looks uncertain. as the US economic data is in line with expectations for a strong third-quarter growth. Plus, comments from various Federal Reserve officials suggest they may raise interest rates again to control inflation. This could support the US Dollar and bond yields, making it wise to wait for more evidence before betting on gold's rebound.

Gold Prices Bouncing Back Amid Economic Indicators

It's worth noting that gold prices are trying to bounce back from their lowest point since March as US bond yields and the US Dollar have both eased off their recent highs. The 10-year US Treasury yield, which hit a 16-year high, has come down a bit. This has pulled back the US Dollar from its highest level since November 2022.

According to the latest US job report, private companies added only 89,000 jobs in September, a drop from the revised higher figure of 180,000 in the previous month. Also, the US ISM Services PMI decreased from 54.5 to 53.6 in September. Despite these signs, the Federal Reserve is likely to stick to its plan of raising interest rates, which might hold back gold from making a strong comeback.

Looking forward, investors will keep their eyes on the highly-anticipated US monthly employment report, the NFP, set to release on Friday. This report will heavily influence the Fed's rate-hike plans, impacting the US Dollar and potentially giving gold prices a new direction.

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

GOLD(XAU/USD) - Technical Analysis

In today's Daily Technical Outlook for GOLD (XAU/USD) on October 5, the current price of Gold stands at $1,857.17 million, with a 4-hour chart timeframe.

Key price levels to watch include a pivot point at $1,874 billion, immediate resistance at $1,901 billion, and subsequent resistances at $1,954 billion and $1,983 billion. Immediate support can be found at $1,821 billion, followed by $1,793 billion and $1,741 billion.

Technical indicators reveal an oversold condition as the Relative Strength Index (RSI) sits at 27.17. The MACD line is slightly above the signal line, hinting at potential upward momentum, while the 50-Day Exponential Moving Average (50 EMA) indicates a short-term bearish trend with a value of $1,836.44.

The observed chart pattern suggests an oversold condition with the completion of a 23.6% Fibonacci level, potentially paving the way for bullish moves to the 38.2% or 50% Fibonacci levels.

In conclusion, the overall trend for Gold appears neutral, with a range-bound movement between $1,830 and $1,816. A breakout will be the deciding factor for the next directional move, with a short-term forecast anticipating a test of resistance at $1,901 billion in the days ahead.

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