Gold Technical Analysis October 10, 2013

10-10-2013 gold daily chart

(Gold Price Network) – Gold price lost around $8 of its value today, currently traded around $1,300. The White House announcement of the Fed’s head nominee Janet Yellen started to have effects on the financial markets all over the world. This added selling pressure on gold from outside markets.

It’s the 10th day of the U.S. government partial shutdown and the budget issue hasn’t been resolved yet. However, The U.S. presidential office announced Janet Yellen, the current Federal Reserve vice Chairwoman, to be the U.S. President nominee to be the successor of Ben Bernanke, a step that eased the financial markets uncertainty. She is perceived as a dove when it comes to monetary policies, which is bullish for gold and precious metals on mid-term and long-term, but bearish on the short term.

Gold price opened the trading session today, October 10th, at $1,306.93 per ounce and eased during the Asian trading hours. Gold then touched a high of $1,308.46 before dropping to a low of $1,296.65 on the early European trading hours. The yellow metal recovered and currently traded just around $1,300 per ounce. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), holdings stayed unchanged at 898.18 tonnes, after having the biggest fall on last Wednesday liquidating 4.2 tonnes and totaling 7.8 tonnes of gold liquidated since the U.S. government shutdown so far. London’s AM gold fixing was at $1,298.00 on Thursday versus Wednesday’s PM gold fixing at $1,304.00.

On the short term analysis of the daily chart, gold patterns on the daily chart remain neutral with the near term advantage to gold bears. The current gold price is moving below both, the fast 5-day EMA $1,309 (Orange) and the slower 35-day EMA (Blue) at $1,331. The 35-day EMA breached the 38.2% Fibonacci retracement resistance of the uptrend from mid-June low to mid-August high, while the 5-day EMA is moving closer to the 50% retracement at $1,306 is providing additional resistance. However, gold physical demand below the $1,300 level formed a strong support. Therefore, it’s more likely to see gold traded sideways for the time being with the gold bears having technical advantage.

The MACD (20,60,18) indicator is giving negative value and last seen at the -15.216 level, indicating further downtrend momentum. However, the $1,300 level still provides support while the $1,325 shows resistance. The 14-day RSI indicator is at 40.8589, and the indicator readings were almost flat for the past few sessions which might be considered as a neutral signal on the daily gold price chart. The RSI resistance, the previous peak, is at the 51 mark, while the RSI support, the previous bottom, at 36.

The gold market is still focused on the U.S. economic policies and news. There debate about the next Fed chairman, and the Fed tapering economic stimulus have eased after the minutes release yesterday and nominating Yellen. The market’s biggest worries, the debt ceiling and U.S. government shutdown is still an issue haven’t been resolved yet. Announcing a dovish Fed Chairwoman, Yellen, as the next Federal Reserve head eased much of the market uncertainty. This decision awaits the U.S. Congress approval though. U.S. equity markets and the U.S. dollar gave Yellen a warm welcome and rallied.

With the greenbacks starting to turn bullish, the gold bugs are acting more bearish. However, they failed to push gold price below $1,300, 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 FOMC comment on the U.S. government shutdown and appointing Bernanke’s successor should ease some of the market tension.

Gold’s largest consumers, India and China, both showing a weakening demand. India increased gold import tariff and while China’s return from the holiday didn’t have much impact on the gold market. Gold rallied momentarily during the Asian trading hours but failed to keep the price higher.