Gold Technical Analysis October 4, 2013

07/10/2013 gold daily chart

(Gold Price Network) – Gold price stayed steady after it showed signs of recovery from the selloff on October 1st. It’s the 7th day of the U.S. government partial shutdown and the budget issue hasn’t been resolved yet. Key economic data from the U.S. Labor Department is delayed till the debate in Washington resolve. Gold price volatility is easing slowly ahead U.S. debt debate on October 17.

Gold price gained overnight opening the trading session today, October 7th, at $1,314.05 per ounce and touched a low of $1,308.44, during the early European trading hours before rallying. The yellow metal is currently traded around the $1,320, the session’s high on the daily chart. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), holdings dropped 6 tonnes to reach 899.99 tonnes last week, having the biggest fall on Wednesday net liquidating 4.2 tonnes. London’s AM gold fixing was at $1,311.00 on Monday versus Friday’s PM gold fixing $1,309.75.

On the short term analysis of the daily chart, the current gold price is moving between both, the fast 5-day EMA $1,315 (Orange) and the slower 35-day EMA (Blue) at $1,336. The 35-day EMA should form resistance if the prices rally, especially with the 35-day EMA moves close to 38.2% Fibonacci retracement 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 as the Bollinger Bands indicator confirms.

The MACD (20,60,18) indicator is giving negative value and last seen at the -13.238 level. The down-trend is gaining momentum over the past few days, as the indicator shows. The gold bears have 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 45.4382, 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, an indication of price correction and less volatility. The RSI resistance, the previous peak, is at the 51 mark, while the RSI support, the previous bottom, at 36. Gold might consolidate for some time before breaking through its current trading range as the price volatility in the current uncertainty eased.

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. Despite gold ETF liquidation, gold price gained on Wednesday.

With the greenbacks turning more bearish, the gold bugs feel more bullish. However, they failed to push gold price upwards, but they kept it from 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. The gold market awaits the Chinese physical demand to renew on Thursday.