Gold - XAU/USD Chart

Gold price forecast: Who’s up for a buy trade over $1,754?

Posted Tuesday, October 5, 2021 by
Arslan Butt • 3 min read

Despite the various negative headlines, the price of the yellow metal failed to extend its previous three-day upward rally, turning sour around the $1,760 level, amid a stronger US dollar and a riskier market sentiment. Today, during the Asian trading session, the gold price failed to extend its upward trend, becoming depressed around the $1,760 level, as the US dollar gathered upside momentum on the day.

The US Dollar Index climbed from the lower levels to an intra-day high of around 94.00, making gold cheaper for holders of other currencies. Thus, the bullish bias in the US dollar was seen as one of the key factors that put some selling pressure on the dollar-denominated commodity, gold. In addition to this, the global equity markets have been flashing green since the day started, which tends to undermine the safe-haven metal prices. The risk sentiment was backed by the renewed hopes surrounding the US stimulus package.


Currently, the yellow metal is trading at 1,760.06, and consolidating between 1,757.86 and 1,770.16. Moving on, traders seem cautious about placing any strong positions ahead of the Fed’s monetary policy meeting. A hawkish stance by the Federal Reserve would diminish the demand for gold. If the Fed raises interest rates, the opportunity cost of holding bullion, which pays no interest, will increase.Despite the faster spread of the delta variant of the coronavirus and the escalating US-China tussle, the market trading sentiment succeeded in putting a stop to its losing streak of earlier in the day, drawing some fresh bids for the day. The renewed hopes of an infrastructure spending package could also be supporting the stock futures. US President Joe Biden showed his willingness to trim the demand for infrastructure spending, which favoured the market sentiment in Asia.

Meanwhile, Japan’s new PM, Fumio Kishida, warmly welcomes global leaders, which indicates progressive tie-ups, as the global giants overcome the pandemic with faster jabbing rates. Peviously released economic data also increased optimism about the recovery of the US economy, which positively impacted the market trading sentiment. On the data front, US New Factory Orders came in above the forecasts, surging by 1.2% in August, which is well above the market forecast of a 1% rise. The positive appearance of US stock futures highlights the risk-on sentiment, which tends to undermine the safe-haven metal, GOLD.

Stronger US dollar weighs on gold

Despite the risk-on market mood, the broad-based US dollar maintained its early-day upward rally and remained well bid on the day. The US Dollar Index surged from the lower levels and stood strong near 94.00. The higher US 10-year benchmark Treasury Yields added to the upward pressure on the USD prices, which rose two basis points to 1.48%, after testing a high of 1.56% in June. In the meantime, the previously released upbeat US data also played a significant role in supporting the US currency. The rise in the value of the greenback kept bullion prices under pressure, as the price of the XAU/USD is inversely related to the value of the US dollar.

The long-lasting US-China tensions also got an additional lift after the US condemned Chinese activity near Taiwan. The remarks by US Trade Representative (USTR) Katherine Tai, who cited Beijing’s shortfall in meeting the phase one deal targets, also added to the drama. The suspension of trading in Evergrande stock in Hong Kong has fueled speculation that the bankrupt real estate firm is being sold to pay off debts.

What’s next on the docket?

Furthermore, the non-stop jump in Australia’s total umber of COVID infections, which has meanwhile hit the highest level since September 30 – with the latest figure of 2,406 – is also weighing on the market trading sentiment. The negative headlines may help to limit any further losses in the safe-haven gold price. Looking forward, market traders will keep their eyes on the US ISM Manufacturing PMI and the final reading of the Markit PMI for September. Meanwhile, the headlines concerning China and Evergrande will not lose their significance.

Gold - XAU/USD Chart

Gold price forecast – Daily technical levels

Support               Resistance
1,753.89              1,777.49
1,739.07              1,786.27
1,730.29              1,801.09
Pivot Point:        1,762.67

Gold price forecast: Upward trendline supports at $1,754

Gold has been trading at $1,756 per ounce on Tuesday, with a bearish bias. It is currently receiving immediate support at the 1,754 mark, which has been prolonged by an intraday pivot point. Gold breached the pivot point support mark of 1,762, exposing it to the 1,754 support level.

On the downside, a breakthrough at the 1,754 level would open the precious metal to levels of  1,747 and 1,739. On the downside, a break at 1,739 would expose gold to the 1,731 level on the downside. On a positive note, the next resistance level for gold remains at 1,762, and a break at this level would open the precious metal up to the 1,770 level. The RSI and stochastic both support a selling trend in GOLD; therefore, a bearish bias prevails below 1,762 and vice versa.

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