Technical Analysis

GOLD Analysis – November 05, 2021

By LonghornFX Technical Analysis
Nov 5, 20213 min

Gold’s Daily Price Analysis

Gold is trading bullish in the Asian session on Friday, heading for a weekly gain. Investors were also digesting fresh policy decisions from the Bank of England (BOE) and the Federal Reserve of the United States (Fed). Gold futures were up 0.06 percent to $1,794.65 at 11:58 p.m. ET (3:58 a.m. GMT), on track for its second weekly rise in three weeks with a 0.7 percent gain.

The Bank of England held its interest rate unchanged at 0.10 percent in its announcement on Thursday. The move surprised investors, who had expected the BOE to be one of the first major central banks to increase interest rates following the outbreak of COVID-19. The Fed announced its own decision a day earlier, saying that it would begin asset tapering but would be "patient" on interest rate hikes. It also maintained its belief that inflationary pressures would be short-lived.

The European Central Bank (ECB) joined the dovish chorus as well. ECB board member Isabel Schnabel stated on Thursday that, while the central bank is mindful of the worries about high inflation, it is improbable that interest rates would be raised in 2022. Chinese markets dragged on Asian equities on Friday, failing to join a worldwide record-breaking run following a week in which central banks around the world avoided any hawkish surprises to support the dollar.

The dollar made substantial gains against sterling, which fell after the Bank of England surprised markets by passing up an opportunity to hike interest rates on Thursday. Later today, the major focus will be on the US nonfarm payroll figures, which can drive massive market volatility.

US Nonfarm employment change – What to expect?

Economists believe that 800,000 jobs would be required on average for the economy to recover by the middle of next year. Results below that threshold will widen the window for when the Fed may hike interest rates. This may also have an impact on inflation forecasts.

Analysts predict that the October NFP will be 450K, up from 194K in the previous reading. That's a significant omission, bringing the total close to 200K. Bond yields would fall as a result of this.

Value equities may be under pressure, while tech companies may be on the rise. A significant beat, on the other hand, would likely add some more tailwinds to risk appetite. As a result, the dollar would drop even further.

Despite an anticipated rise in labour force participation, the unemployment rate could fall a decimal point to 4.7 percent from 4.6 percent. Finally, average hourly wages may continue to rise at 4.9 percent, up from 4.6 percent previously.

GOLD Intraday Technical Level

Support Resistance

1774.84 1803.64

1756.77 1816.37

1744.04 1832.44

Pivot Point: 1786.57

GOLD - Technical Outlook

Gold is on a bullish streak, trading near its double top resistance level of 1,798.Alongside, the downward trendline is also extending resistance at the 1,798 level on the 4-hour timeframe. On the bullish side, the break above the 1,798 level exposes the metal towards the next resistance levels of 1,803 and 1,816.

A break below the 1,786 support level exposes the precious metal price towards the 1,774 level. Further breakout of the 1,774 level adds additional selling pressure and exposes the metal towards the 1,744 level. The RSI and MACD are in support of a buying trend along with the EMA. Hence, the bullish bias dominates over the 1,786 level and vice versa. All the best!


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