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Gold falls as the US Dollar Strengthens


A stronger U.S. dollar has sent the spot gold futures contract lower. The yellow metal is trading well below the key fifty, one hundred and two hundred (50, 100, 200) day simple moving averages which have flattened out.

The bullion is also below a falling trend line in play since mid-September. The spot gold contract looks bearish headed into a new trade week.

The economic calendar for Monday is not very busy. The European Union will hold their Eurogroup meeting. The euro area will also release their monthly Sentix consumer confidence survey. The United States will publish monthly factory orders data and the United Kingdom has no economic data on the calendar.

Spot gold traders are watching central bank headlines. The U.S. Federal Reserve is signaling imminent tightening of monetary policy. Also of interest to safe haven assets, the U.S., last week, managed to avoid a government shutdown.

However, there is no progress on the debt ceiling which could see a default within the month. President Joe Biden’s key fiscal infrastructure spending plan is far from being approved by Congress. President Biden is seeing a lot of dissention within his own political party which is holding up a vote.

Daily Gold Technical Analysis (XAU/USD)

Looking at the above daily spot futures MT 4 price chart (XAU/USD), momentum is skewed lower. The 14 day relative strength index (RSI) is above thirty which signals possible near-term losses for the spot contract.

With that said, immediate technical support lines up at the September low price point. This downside barrier is at $1,720 per ounce. A daily close below this level opens the door to challenge the August swing low at $1,690 per ounce. The next layer of technical support lines up at $1,680.

On the upside, near-term technical resistance is at the October high price level of $1,760 per ounce. The next upside level lines up at $1,785 with $1,810 per ounce coming up next.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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