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Gold Price (XAU/USD) Struggling to Move Higher, Significant Resistance Holds

Gold Price (XAU/USD) Struggling to Move Higher, Significant Resistance Holds

Nick Cawley, Senior Strategist
What's on this page

Gold Price, Chart, and Analysis

  • US Treasury yields dip ahead of US Labor Report (NFP).
  • Gold struggles with Fibonacci resistance.

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The price of gold continues to struggle with a notable level of resistance, despite a slip lower in US Treasury yields. This week’s economic calendar is fairly thin until Friday when the latest US Jobs Report hits the screen, a release that will be closely watched by the Federal Reserve for one.

The recent rally in the US dollar has been put on hold ahead of this week’s US NFP data, a release that will go a long way in determining when the Fed will begin to slow down its rate of US bond purchases. The greenback has rallied over the last few weeks in the expectation that the Federal Reserve will soon announce that they will begin to reduce their quantitative easing program, tightening monetary policy. The US dollar basket (DXY) has rallied from a sub-90 low in late May to a current level around 94.00 and the current nudge lower is likely to be retraced going into Friday’s data release. This will continue to weigh on the price of gold.

US Dollar Basket (DXY) Daily Price October 4, 2021

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Gold continues to gravitate towards the $1,763/oz. area, the 50% Fibonacci retracement of the March-August 2020 rally. This area has held as either support or resistance over the last year and recent price action around this level suggests that it will likely hold as short-term resistance. Gold has produced a series of near-term lower highs and now trades below all three simple moving averages, adding to the negative narrative. The next level of support is either side of $1,720/oz. before sub-$1,700/oz. levels come into play.

Gold (XAU/USD) Daily Price October 4, 2021

Retail trader data show70.29% of traders are net-long with the ratio of traders long to short at 2.37 to 1. The number of traders net-long is 0.55% higher than yesterday and 5.49% lower from last week, while the number of traders net-short is 0.39% lower than yesterday and 24.62% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

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What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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