Gold: still oversold
Gold continued to follow the path of USD during the previous week, and reached its lowest weekly level at $1.810. Friday was a rebound day for gold, as USD reverted a bit its path to the upside, supported by the easing of the sell-off of US Treasuries in expectation of further increase of interest rates by the Fed. Gold reached its highest weekly level at $1.830 at Friday trading session. The level of $1.810 represents the long term support line for gold, which has been tested during the previous week. It is significant from the perspective of the technical analysis in a sense that with this move one cycle of price movements is over, and another starts, which is about a short term reversal to some of the previous levels of gold.
The RSI indicator continues to move within an oversold side. This is indication of a strong sell-off of gold during the previous period, and that soon its reversal is to be expected. Moving average of 50 days continued its divergence from its MA200 counterpart, confirming a cross which occurred as of the end of September.
Technical analysis is clearly pointing to the point of reversal for the price of gold in the coming period. However, some strong moves to the upside should not be expected at this moment, as the markets are slowly finishing adjustments for a new Fed`s narrative. Support line at $1.810 has been tested during the previous week, so the next target of gold should be the resistance line at $1.880. A move below the support line is highly unlikely, as $1.810 represents a long term support line and a level where reversal occurs with higher certainty, except in case of some significant fundamentals which are unknown at this moment.
Important news to watch during the week ahead are:
USD: Producer Price Index for September, FOMC Minutes, Inflation Rate for September, Michigan Consumer Sentiment preliminary for October.
The RSI indicator continues to move within an oversold side. This is indication of a strong sell-off of gold during the previous period, and that soon its reversal is to be expected. Moving average of 50 days continued its divergence from its MA200 counterpart, confirming a cross which occurred as of the end of September.
Technical analysis is clearly pointing to the point of reversal for the price of gold in the coming period. However, some strong moves to the upside should not be expected at this moment, as the markets are slowly finishing adjustments for a new Fed`s narrative. Support line at $1.810 has been tested during the previous week, so the next target of gold should be the resistance line at $1.880. A move below the support line is highly unlikely, as $1.810 represents a long term support line and a level where reversal occurs with higher certainty, except in case of some significant fundamentals which are unknown at this moment.
Important news to watch during the week ahead are:
USD: Producer Price Index for September, FOMC Minutes, Inflation Rate for September, Michigan Consumer Sentiment preliminary for October.
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