Technical Analysis

GOLD Analysis – October 07, 2021

By LonghornFX Technical Analysis
Oct 7, 20213 min

XAU/USD Breaks Below $1,757 Pivot Point

Gold prices were closed at $1764.55 after reaching a high of $1765.85 and a low of $1745.90. Gold ticked up in a tight trading range on Wednesday as the U.S. Treasury yield dropped on the day, although a stronger dollar kept the gains limited for the safe-haven metal. Investors were awaiting the U.S. labor market data that is scheduled for this week.

During early trading hours, the 10-year Treasury note yield rose to a more than 3-month high but then reversed course and moved to the downside. Treasury yields remained above the 1.5% level, limiting gold's gains for the day.

Furthermore, the gains in yellow metal were capped by a stronger U.S. dollar, which is currently trading at 94.45 against a basket of six major currencies. The dollar was gaining strength from the surging energy prices that could spur inflation and interest rate hikes, making gold expensive for holders of other currencies and restricted gains.

Some market participants believed that the upcoming data on non-farm payrolls in the United States from September would be the highlight, limiting the gains in the yellow metal as it will shape the Federal Reserve's tapering plans. However, others believed that even if the U.S. non-farm payroll data came in line with expectations, some Fed members already considered that the condition for tapering had been fulfilled, and that was putting pressure on gold.

On the data front, at 17:15 GMT, the ADP Non-Farm Employment Change for September surged to 568K against the forecasted 425K and supported the U.S. dollar that further caped gains in yellow metal prices.

In a meeting with bank and industry leaders at the White House on Wednesday, U.S. President Joe Biden increased the pressure on congressional Republicans to support a debt ceiling raise. Biden said that the opposition would take America right to the brink. He also stated that Republicans were planning to block a third attempt by Senate Democrats to raise the debt ceiling, which was not right and was dangerous.

Republicans want Democrats to raise the debt ceiling using reconciliation, a process that would not require Republican votes. However, Democrats have refused, saying Republicans should join in the vote as the debt includes about $8 trillion in spending approved during Republican Donald Trump's presidency. The stalemate was increasing uncertainty in the market, and hence, gold gained some ground over the uncertainty and rose on Wednesday.

GOLD Intraday Technical Level

Support Resistance

1751.69 1771.64

1738.82 1778.72

1731.74 1791.59

Pivot Point: 1758.77

GOLD - Technical Outlook

The precious metal gold was trading at $1,756 with a bearish bias. It is getting immediate resistance at the 1,757 level, which has been extended by an intraday pivot point. Gold has violated the pivot point support level of 1,757, 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 1,757 level and a breakout of this exposes the pair towards the 1,765 level and 1769. The RSI and Stochastic are supporting a selling trend in gold, thus, the bearish bias dominates below 1,757 and vice versa. Good luck!


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