Gold price showed signs of recovery from the selloff on October 1st. The yellow metal was under selling pressure on news of U.S. government shutdown. It’s the fourth day of the U.S. government shutdown and the budget issue hasn’t been resolved yet. 4 Federal Reserve officials due to make a speech on Friday, and no economic data would be released today from the U.S. Labor Department.
Gold price gained overnight and opened the trading session for the day, October 4th, at $1,317.10 per ounce and touched a low of $1,307.93 briefly, during the early European trading hours before touching a high of $1,325.41 and bouncing back towards the $1,310 level. The yellow metal traded around the $1,315 level for most of the European session. SPDR Gold Shares (GLD) holdings, the largest gold backed ETF, fell 1.8 tonnes on Friday, totaling 6 tonnes of gold shares liquidation. London’s AM gold fixing was at $1,316.00 on Friday.
On the short term analysis of the daily chart, the current gold price is moving below both, the fast 5-day EMA $1,314 (Orange) and the slower 35-day EMA (Blue) at $1,338. These indicators should form resistance if the prices rally, especially with the 35-day EMA moves close to 38.2% Fibonacci retracement at $1,336, and the 5-day EMA to the 50% Fibonacci retracement at $1,306.22 of the uptrend from mid-June low to mid-August high. The 61.8% retracement at $1,276 is providing additional resistance along with physical demand below the $1,300 level. However, the $1,340-$1,350 level proved to be strong resistance. Therefore, it’s more likely to see gold price consolidates.
The MACD (20,60,18) indicator is giving negative value and last seen at the -12.598 level. The down-trend is gaining momentum over the past few days, as the indicator shows. The gold bears near-term advantage unless another unexpected event takes place. However, the $1,300 level still provides support while the $1,325 shows resistance. The 14-day RSI indicator is at 41.9515, which might be considered as a neutral signal on the daily gold price chart. The indicator readings was declining for the past days, confirming gold price downside movement. However, Wednesday gains put gold prices back on track. The RSI resistance, the previous peak, is at the 44 mark, while the RSI support, the previous bottom, at 36. Gold might consolidate for some time before breaking through its current trading range despite the price volatility in the current uncertainty.
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 movements, or act as a currency against the USD and rallies for safe-haven demand. Apparently, it’s moving as mixture of both and the price is weakening despite the weaker USD.
With the greenbacks turning more bearish, the gold bugs feel more bullish. However, they failed to push gold price upwards, and keeping it failing under the $1,300 level, despite the weaker physical demand from Asia. The gold market might be moving physiologically due to the nerve-wrecking news and the unexpected political outcome of the debate in Washington DC. However, the first days panic seems to diminish.
Gold’s largest consumers, India and China, both showing a weakening demand. India increased gold import tariff and while China is currently in holiday.