The gold market is losing its cool before the upcoming storm of the U.S. debt ceiling. The yellow metal was under selling pressure on news of U.S. government shutdown.
Gold price opened the trading session for the day, October 2nd at $1,288.19 per ounce, touching the day’s low so far at $1,277.80 during the Asian trading hours before continuing to trade around $1,290 during the rest of the day. Gold touched the day’s high during early European trading hours at $1,297.15. London’s AM gold fixing was at $1,293.75 on Wednesday.
On the short term analysis of the daily chart, the current gold price is moving below both, the fast 5-day EMA $1,310.35 (Orange) and the slower 35-day EMA (Blue) at $1,340.34. The Moving Average indicator movement shows gold price is confirming the downtrend movement, as prices were lower than both trend-following indicators. These indicators should form resistance if the prices rally, especially with the 35-day EMA moves close to 61.8% Fibonacci retracement and the 5-day EMA to the 50% Fibonacci retracement of the uptrend from June low to August high. The 38.2% retracement at $1,249 is providing resistance along with physical demand below the $1,300 level.
The MACD (20,60,18) indicator is giving negative value and last seen at the -11.842 level. The down-trend is gaining momentum over the past few days, as the indicator shows. The uncertainty about gold price in the market is causing the technical indicators to give mixed signals, giving the gold bears near-term advantage unless another unexpected event takes place. The 14-day RSI indicator is at 37.6375, which might be considered as a buying signal on the daily gold price chart. The indicator readings are declining for the past 4 days, confirming gold price downside movement. The RSI resistance, the previous peak, is at the 48 mark, while the RSI support, the previous bottom, at 33.
The gold market is still focused on the U.S. economic policies and news. There is the talk about the next Fed chairman, tapering economic stimulus and the market’s hot news, the debt ceiling and U.S. government shutdown. Gold bugs and investors now wonder whether gold will follow raw commodities and slip, or act as a currency against the USD and rallies for safe-haven demand. Apparently, it’s moving more like a commodity and the price is weakening despite the weaker USD.
Gold is once more under the spotlight as the USD counter-currency. With the greenbacks turning more bearish, the gold bugs feel more bullish. However, they failed to push gold price upwards. The gold market might be moving physiologically due to the nerve-wrecking news and the unexpected political outcome of the debate in Washington DC. Moreover, gold’s largest consumers, India and China, both showing a weakening demand. India increased gold import tariff and while China is currently in holiday.