Gold Analysis: Breaking above 1765 may open the door for 1830
Updated
What happened the last week?
Gold is on a hot streak! Last week, the yellow metal saw some relief as it went up against the U.S. dollar and other currencies worldwide. As a result, the gold has ended its three-week decline.
But will this temporary victory be more than just an illusion? With uncertainty surrounding global energy production brewing into what many fear could become another 2008-style crisis.
China Evergrande debt issue, tapering fears from Federal Reserve banks, and The U.S. political drama sent the gold price high in the last week despite the U.S. dollars positive economic reports.
In such an environment, investors may not want to risk tying their fortunes too closely with one element when they don't know which way things are going next month. But one thing we should not forget is that October is not suitable for gold buyers, and it is historically proven.
Last week, the FOMC was hawkish, and T-bond helped the USD; as a result, gold tested nearly 1722 price areas. Even FOMC members hint that the tapering may start soon, and rate hiking is expected in 2022. The U.S. economics reports were also positive than forecast.
But all positive factors for the USD didn't stop the rising gold price because of inflation expectations, the U.S. political drama, China Evergrande debt issue, tapering fears, and uncertainty on global energy production.
Great Britain is suffering from a lack of oil and gas. We also saw the oil and gas price jump up as a result. It means investors are concerned about inflation expectations.
What about the next week?
Several market move data will be published in the next week, including the U.S. job market reports. Last month's NFP report was too negative. It was supposed to, because august added a high number of jobs in the U.S. economy, and September's forecast was also a high number. Usually, it seemed a difficult position.
Anyhow, The next few days will be interesting for gold traders. The Chinese markets are closed on Thursday, which should allow volatility in Asian trading while they remain closed through Tuesday's US ISM Services PMI (which is informative).
Wednesday morning brings us ADP Nonfarm Employment Change which gives insight into America's job market growth rate before we see any indication from the Federal Reserve regarding tapering expectations towards monetary policy changes due out later.
The U.S. Department of Labor's weekly Initial Jobless Claims report will be drawing some attention alongside New York Federal Reserve President John William's speech on Thursday.
Friday brings in the all-important NFP data expectations for a better-than-expected print at 500K vs. last month's abysmal 235k figure. It indicates that what may have well-made progress towards meeting Fed Chairman Powell and Co.'s goal for maximum employment - it'll be closely eyed, no doubt.
The price of gold will remain at the mercy of market sentiment. Investors must keep their eye on what is happening in U.S. politics and how global energy crises are playing out. Investors will also keep an eye on the economic data from around the world, including emerging markets.
China has recently started investing more heavily in technology stocks rather than buying physical ones. They used to do it just because there's too much supply already causing inflation across all types of goods these days. So, be careful. Gold's price does not just depend on one factor.
Gold Technical analysis
Gold stuck below the descending trendline. Technically though, it is still in a downtrend. But I am a bit confused that the positive economic reports failed to send gold prices lower from the resistance level.
Usually, gold drops from such a strong resistance level just for a technical reason. But last week, that didn't happen. That means market sentiment favoring higher gold prices.
So, from the present rate, resistance and breakout area is identified at the 1765 price zone. If gold price can break above 1765, it may open the 1780/1785 price zone. I think gold will go for correction from the 1785 price zone.
But in case gold breaks above the 1785/1890 price zone, it is expected to hit again above the 18000/1805 price zone. And our final upside target is the 1830/1835 zone. I don't think gold will be able to break above 1835 easily. Even October is not a good month for gold buyers; it is historically proved.
On the other hand, if we see the global energy production crisis settled and the U.S. job market reports can fulfill the expectations, it is just a matter of time that the gold price will drop heavily. From the present rate, immediate support is identified at the 1750 price zone. Breaking below 1750 will open the door for the following support 1725/1720 price zone.
1720/1725 price zone may act as a retracement area for gold. But breaking below 1720, it is expected gold may hit below the 1700 price zone.
Gold is on a hot streak! Last week, the yellow metal saw some relief as it went up against the U.S. dollar and other currencies worldwide. As a result, the gold has ended its three-week decline.
But will this temporary victory be more than just an illusion? With uncertainty surrounding global energy production brewing into what many fear could become another 2008-style crisis.
China Evergrande debt issue, tapering fears from Federal Reserve banks, and The U.S. political drama sent the gold price high in the last week despite the U.S. dollars positive economic reports.
In such an environment, investors may not want to risk tying their fortunes too closely with one element when they don't know which way things are going next month. But one thing we should not forget is that October is not suitable for gold buyers, and it is historically proven.
Last week, the FOMC was hawkish, and T-bond helped the USD; as a result, gold tested nearly 1722 price areas. Even FOMC members hint that the tapering may start soon, and rate hiking is expected in 2022. The U.S. economics reports were also positive than forecast.
But all positive factors for the USD didn't stop the rising gold price because of inflation expectations, the U.S. political drama, China Evergrande debt issue, tapering fears, and uncertainty on global energy production.
Great Britain is suffering from a lack of oil and gas. We also saw the oil and gas price jump up as a result. It means investors are concerned about inflation expectations.
What about the next week?
Several market move data will be published in the next week, including the U.S. job market reports. Last month's NFP report was too negative. It was supposed to, because august added a high number of jobs in the U.S. economy, and September's forecast was also a high number. Usually, it seemed a difficult position.
Anyhow, The next few days will be interesting for gold traders. The Chinese markets are closed on Thursday, which should allow volatility in Asian trading while they remain closed through Tuesday's US ISM Services PMI (which is informative).
Wednesday morning brings us ADP Nonfarm Employment Change which gives insight into America's job market growth rate before we see any indication from the Federal Reserve regarding tapering expectations towards monetary policy changes due out later.
The U.S. Department of Labor's weekly Initial Jobless Claims report will be drawing some attention alongside New York Federal Reserve President John William's speech on Thursday.
Friday brings in the all-important NFP data expectations for a better-than-expected print at 500K vs. last month's abysmal 235k figure. It indicates that what may have well-made progress towards meeting Fed Chairman Powell and Co.'s goal for maximum employment - it'll be closely eyed, no doubt.
The price of gold will remain at the mercy of market sentiment. Investors must keep their eye on what is happening in U.S. politics and how global energy crises are playing out. Investors will also keep an eye on the economic data from around the world, including emerging markets.
China has recently started investing more heavily in technology stocks rather than buying physical ones. They used to do it just because there's too much supply already causing inflation across all types of goods these days. So, be careful. Gold's price does not just depend on one factor.
Gold Technical analysis
Gold stuck below the descending trendline. Technically though, it is still in a downtrend. But I am a bit confused that the positive economic reports failed to send gold prices lower from the resistance level.
Usually, gold drops from such a strong resistance level just for a technical reason. But last week, that didn't happen. That means market sentiment favoring higher gold prices.
So, from the present rate, resistance and breakout area is identified at the 1765 price zone. If gold price can break above 1765, it may open the 1780/1785 price zone. I think gold will go for correction from the 1785 price zone.
But in case gold breaks above the 1785/1890 price zone, it is expected to hit again above the 18000/1805 price zone. And our final upside target is the 1830/1835 zone. I don't think gold will be able to break above 1835 easily. Even October is not a good month for gold buyers; it is historically proved.
On the other hand, if we see the global energy production crisis settled and the U.S. job market reports can fulfill the expectations, it is just a matter of time that the gold price will drop heavily. From the present rate, immediate support is identified at the 1750 price zone. Breaking below 1750 will open the door for the following support 1725/1720 price zone.
1720/1725 price zone may act as a retracement area for gold. But breaking below 1720, it is expected gold may hit below the 1700 price zone.
Note
We have updated our gold chart and analysis ahead of CPI (Inflation Report) 
Note
We have updated our gold chart. Let's check it out here. Don't miss the next opportunity....
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