Gold Technical Analysis October 8, 2013

08/10/2013 gold daily chart

(Gold Price Network) – Gold price gained around $6 on yesterday’s session, almost recovering fully from October 1st sell off. However, the absence of China due to National Holiday still affects the gold market. It’s the 8th day of the U.S. government partial shutdown and the budget issue hasn’t been resolved yet.

The question now among the market participants, whether gold will continue to trade lower in the 7-week old downtrend, or it will be a turning point for gold to rally. The possibility of gold to be traded sideways might be the most probable at the moment, as market participants awaits China to return from the week-long holiday, and the debate over government spending and debt ceiling in Washington to resolve.

Gold price opened the trading session today, October 8th, at $1,320.65 per ounce and touched a high of $1,327.75 early before consalidating. The yellow metal is currently traded around the $1,320, after touching a low of $1,318.53 on the daily chart. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), holdings remain unchanged this week at 899.99 tonnes, after having the biggest fall on Wednesday liquidating 4.2 tonnes and totaling 6 tonnes of gold liquidated last week. London’s AM gold fixing was at $1,321.00 on Tuesday versus Monday’s PM gold fixing at $1,323.50.

On the short term analysis of the daily chart, gold has already formed lower highs and lower lows from August peaks, and haven’t been able to create higher highs or higher lows through September. The current gold price is moving between both, the fast 5-day EMA $1,318 (Orange) and the slower 35-day EMA (Blue) at $1,335. 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 traded sideways for the time being.

The MACD (20,60,18) indicator is giving negative value and last seen at the -12.974 level. 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 46.375, 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, and an indication of less volatility. 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 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 price movements became out of its traditions for the past few years, as many breakthroughs and events happened in the financial markets. The late recession and debate about gold as an asset plus many new-bloods from emerging economies entering the financial markets might be the reason behind it.

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 and gold gains on uncertainty.

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.