Gold Technical Analysis October 9, 2013

09-10-2013 gold daily chart

(Gold Price Network) – Gold price lost around $10 of its value today, traded around the $1,310 level once again. The reason might be the rally of the USD and U.S. equity markets, and the Chinese buying of the yellow metal muted.

It’s the 9th 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 market uncertainty.

Gold price opened the trading session today, October 9th, at $1,318.77 per ounce and eased during the Asian trading hours to around the $1,310 level. Gold then touched a high of $1,322.75 before dropping fast to a low of $1,307.28 per ounce. The yellow metal rebounded to the $1,310 level and formed the session’s low on the daily chart at $1,302.51. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), holdings dropped to 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 $1,309.50 on Wednesday versus Monday’s PM gold fixing at $1,329.50.

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 trend reversing patterns yet. The current gold price is moving below both, the fast 5-day EMA $1,313 (Orange) and the slower 35-day EMA (Blue) at $1,333. 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 50% retracement at $1,306 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 with the gold bears have the advantage.

The MACD (20,60,18) indicator is giving negative value and last seen at the -14.045 level. The gold bears have near-term technical advantage. However, the $1,300 level still provides support while the $1,325 shows resistance. The 14-day RSI indicator is at 41.8087, 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 is the talk about the next Fed chairman, tapering economic stimulus and the market’s biggest worries, the debt ceiling and U.S. government shutdown. 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. Market participants saw it as a sound move as the U.S. economy will benefit greatly from a reactive monetary policy maker.

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 would 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.