Technical Analysis

GOLD Analysis – October 26, 2021

By LonghornFX Technical Analysis
Oct 26, 20213 min

Pivot Point Breakout at 1,803

Gold ended the day at $1809.10, having reached a top of $1811.45 and a low of $1793.05. On inflation concerns, gold maintained its bullish momentum for the second straight day, remaining above the $1800 mark.

On Monday, investors began anticipating the next Federal Reserve meeting for its next monetary policy decision, as continued concerns about inflation made them wary of placing large wagers in the market. Though there was a belief that inflation would be transitory, the persistence of pressure has created concerns about the prospects.

During Friday's trading session, the price of gold fell from its September high after Federal Reserve Chairman Jerome Powell stated that strong inflation would likely abate next year. He also believes that the central bank should begin tapering asset purchases immediately to lower the amount of support provided to the economy but not yet raise interest rates.

Powell's remarks stoked concerns that inflation will likely stay longer and will not be transitory, as previously claimed by the Fed, which helped the safe-haven metal gain some traction, and gold ended up gaining on Monday, benefiting from its inflation-hedge status.

Investors are now looking forward to the next FOMC meeting scheduled for November 2-3. The markets are pricing more inflation, and investors believe that the current high level of inflation is not a fad. In such a case, gold benefits from its role as a store of value.

Meanwhile, the US Dollar Index was recovering on Monday after trading near 93.84. But the benchmark 10-year Treasury yield fell to 1.62 percent on Monday, boosting the surge in precious metals prices.

Furthermore, the United States and China have made some incremental progress in their economic and trade talks. Chinese Vice Premier Liu He and US Treasury Secretary Janet Yellen spoke for the second time in less than four months.

The call was regarded as realistic, frank, and constructive by Chinese media. Both sides agreed that China and the United States needed to improve communication and macroeconomic policy coordination at a critical juncture in the global recovery.

GOLD Intraday Technical Level

Support Resistance

1796.04 1814.54

1785.27 1822.27

1777.54 1833.04

Pivot Point: 1803.77

GOLD - Technical Outlook

Gold continues to trade bullish and is now priced at $1,804 per ounce. Technically, gold is trading with a bullish bias above the pivot point support level of 1,808. The odds of a bullish trend continuation seem probable as the metal has closed with a bullish engulfing candle above the pivot point mark.

Moreover, the technical side of gold suggests a bullish bias as RSI is still holding above 50 on a 4-hour timeframe. Gold’s immediate support prevails at 1,796 and below this, the next support holds around 1,782 and 1,778.

On the bullish side, gold’s next resistance stays at 1,809, and a breakout of this exposes gold's price towards 1,827. Bullish bias dominates over 1,796 and vice versa. All the best!


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