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Gold Price Outlook: Building a Short-Term Base Despite US Dollar Strength

Gold Price Outlook: Building a Short-Term Base Despite US Dollar Strength

2018-10-02 10:00:00
Nick Cawley, Strategist
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Gold Prices, News and Analysis

  • Gold continues to edge back off recent lows.
  • Friday’s US non-farm payrolls release will be closely watched.

The brand new DailyFX Q4 Gold Forecast is now available to help traders navigate the market.

Are you new to gold trading or are you looking to improve your trading skill sets? We have recently produced an in-depth primer on How to Trade Gold: Top Gold Trading Strategies and Tips.

Gold Price Enjoying a Short-Term Bounce.

After hitting a five-week low of $1,180/oz. last week, gold has gradually moved higher and now trades just under the March 10, 2017 swing-low at $1,195/oz. an area that has seen active trading over the last month. A look at the four-hour chart shows seven higher lows in place, supporting higher short-term prices, with support from the 20-day moving average at $1,188/oz. ahead of $1,180/0z. On the upside, $1,195/oz. before the 50- and 200-day ma up to $1,197.6/oz.

Gold Four-Hour Price Chart (August 21 – October 2, 2018)

Gold Price Outlook: Building a Short-Term Base Despite US Dollar Strength

On the daily chart, the picture looks slightly less positive with gold trading below all three moving averages. However, the RSI indicator is mid-market and pointing marginally higher and a break above the 20- and 50-day ma would open the important 61.8% Fibonacci retracement at $1,215/oz.

Gold Daily Price Chart (January – October 2, 2018)

Gold Price Outlook: Building a Short-Term Base Despite US Dollar Strength

US Dollar Strength Continues

The US dollar continues its post-FOMC rally and is nearing a one-month high at 95.33. Ahead on Friday, the latest US labor release (non-farm payrolls) with the unemployment rate expected to fall to 3.8% from 3.9%, another multi-decade low, while average earnings are expected to be trimmed back to 2.8% from 2.9% on an annual basis.

Comprehensive DailyFX Economic Calendar

The latest IG Retail Sentiment Indicatorshows that traders remain 84.0% net-long of the precious metal – normally a bearish contrarian sentiment indicator – but recent daily and weekly shifts currently suggest that the price of gold may move higher.

Are you new to gold trading or are you looking to improve your trading skill sets? We have recently produced an in-depth primer on How to Trade Gold: Top Gold Trading Strategies and Tips.

We are interested in your opinion and trading strategies for Gold. You canshare your thoughts, views or analysis with us using the comments section at the end of the article or you can contact the author via email at nicholas.cawley@ig.com or via Twitter @nickcawley1.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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