Gold defends $4,100 as senate works to resolve shutdown

Dollar Index consolidates Above 200 Day SMA 99.00.
Global stock Indices show resilience on optimism on US shutdown.
Markets count on rate cut by Fed in early next year.
Global economic concerns continue to boost Gold demand.

Sunil Kumar Dixit SK Charting

Gold 4 Hour Analytical Chart by www.skcharting.com

What's going on in Gold?

Recent drop in Gold prices reaching $4097 has witnessed mild recovery which faces hurdle at $4145 as global stock indices show resilience in the backdrop of optimism on the US Senate working on a possible resolution to the longest government shutdown in the US history stretching to 42 days. The demand for the greenback shows some limited recovery as the dollar index consolidates above 200 day SMA 99.00

Fundamental drivers

US Senate votes to end the longest shutdown.

Dollar Index shows mild recovery above 99.00

Markets expect interest rate cut in early next year though Fed officials maintain neutrality.

Central Banks, especially China and Mid East, continue Gold purchases.

Safe haven demand continues in consistent manner.

Investors position for future inflation hedging.

Technical drivers

Price stability above psychological handle of $4100

Bulls defending 5 Day EMA $4090, the first line of defence.

4 Hour RSI reading at 62, still room for extension towards next leg higher before overbought conditions appear.

Immediate hurdle sits at $4145 above which $4155 is next challenge.

Immediate support sits at $4118-$4115 below which $4100 my be exposed.

What's next high probability scenario

Prevailing price stability above immediate support $4118-$4115 favours further upside on strong break above descending trend line resistance dynamically positioned at $4143-$4145 which next requires clear break above $4153-$4155 to advance towards next target $4193 which aligns with 61.8% Fibonacci retracement of correction from $4381 record high to $3886 low

Author

Sunil Kumar Dixit

SK Charting

Sunil Kumar Dixit is Chief Technical Strategist and founder of SK Charting, a research firm based in India. He tracks Precious Metals, Energy, Indices and Currency Pairs. He also participates as an expert panellist on Channel Television, Nigeria.

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