Gold’s 2-week rebound spoiled by NFP data
|Gold experienced some notable gains in the 2 weeks leading up to the release of the Non Farm Payrolls (NFP) data. However, this trend appears to have been spoiled with a sharp decline in gold at the end of last week and continuing at the start of this week.
The solid NFP report, which registered 263K jobs added to the US economy in September, validated the FED's hawkish stance toward interest rate hikes. As such, the US dollar gained, and gold has fallen victim. The market now expects another 75-basis-points hike at the next FOMC meeting, which could possibly send Gold to another low.
On the technical side, looking at the 4-hour chart, gold rejected at the US$1,730 resistance level coinciding with overbought conditions, according to the Kirill Channel Indicator. The Kirill Channel Indicator attempts to show overbought and oversold zones.
The price briefly recovered at $1,700 but bounced from $1,725 before emphatically breaking the $1,700 support area on its second test, on its way down to Kirill’s profit taking line near $1,666.
Traders looking for further drops might want to wait for confidence in the $1,660 support area to waiver, or for more candles to close below the profit-taking Kirill line. Possible targets could be $1,645, which sits just above the first oversold condition line.
If the profit-taking line acts as a bounce-point, possible upside targets could include $1,670-5 and $1,695. However, better buying opportunities might exist if gold bounces at points that coincide with the green oversold bands of the Kirill channel. Bounce-points to look out for could include $1,650, $1,640, and $1,627.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.