Technical Analysis

GOLD Analysis – October 12, 2021

By LonghornFX Technical Analysis
Oct 12, 20213 min

Pivot Point Breakout at 1,755

Gold prices concluded at $1753.25 per ounce after reaching a high of $1758.65 and a low of $1751.20. Gold extended its loss on Monday and fell for the day, but it only fluctuated by $7 in a single day. The U.S. Dollar Index, which measures the greenback's value against a basket of six major currencies, was strong on Thursday, moving towards the 94.40 level, which provided more support to the U.S. dollar while keeping the yellow metal under pressure. The 10-year Treasury yield reached its highest level since May at 1.62 percent, bolstering the greenback's strength and contributing to the yellow metal's downward trend.

The U.S. market was closed on Monday due to a bank holiday around Columbus Day, resulting in low trading volume and, as a result, gold remained sluggish. There was no macroeconomic data release from the United States on Monday, so market players followed the prior trend.

Despite the dismal U.S. job growth data, the Federal Reserve's estimates of unwinding stimulus measures this year were unaffected on Friday. Some observers argued that the labor shortage was driving up wage pressures, which might increase inflation even further, and that the Fed would eventually have to reduce support measures.

Bullion is viewed as a hedge against inflation and currency depreciation caused by massive stimulation. However, as the Fed reduces its stimulus, the appeal of gold will wane. Despite a slowing in job gains last month, the market was still going to the downside as the Fed's chances of lowering economic assistance remained high.

According to Friday's Non-Farm Payroll statistics, 194,000 jobs were added in September, falling short of economists' projection of 500,000. Meanwhile, the unemployment rate has fallen to an 18-month low of 4.8 percent, and wage growth has accelerated.

This pushed the dollar to its highest level in roughly three years versus the safe-haven currency, the yen, while the benchmark 10-year Treasury yield also reached its highest level since late May, raising the opportunity cost of storing metal, which pays no interest.

GOLD Intraday Technical Level

Support Resistance

1748.50 1759.55

1743.75 1765.85

1737.45 1770.60

Pivot Point: 1754.80

GOLD - Technical Outlook

During the Asian trading session on Tuesday, gold was trading with a slight bullish bias at the 1760 level.It has already violated an intraday pivot point level of 1755, indicating bullish sentiment in the market.

On the upside, gold is anticipated to encounter immediate resistance around 1765, while a break above 1765 might push gold prices to the following resistance levels of 1770. Gold is now holding at 1760 and it may find immediate support at 1759, which is being extended by a triple top pattern. This triple top pattern was violated during the Asian session, and now it’s working as a support for the gold.

Below this pivot point, the 50-day SMA (simple moving average) provides immediate support at 1755. Gold's bullish bias remains strong above 1,759 and vice versa.

All the best!


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