Gold Price Forecast – Bullish Bias Dominates Over $1,758, Ahead of Nonfarm Payroll
Arslan Butt•Monday, October 4, 2021•3 min read
Good morning, traders, and welcome back to another exciting week. On Monday, the
gold price forecast is slightly bullish, as investors are doing profit-taking in the dollar, ahead of the US nonfarm payroll data due later this week.
Gold prices closed at $1,758.40, after reaching a high of $1,765.20, and a low of $1,749.90. Gold extended its gains on Friday, but remained under consolidation, with minor movement throughout the day.
Weakness in US dollar underpins gold
GOLD inched higher on Friday, on the back of various factors, including the weaker US dollar, worries about rising inflation and growth risks countered by bets on looming interest rate hikes. The greenback was weak across the board on Friday, as the US Dollar Index, which measures the greenback’s value against a basket of six major currencies, dropped for the second consecutive session, reaching a level that weighed on the US dollar and pushed the gold prices higher.
US Treasury Yield, on a 10-year note, falls
The US Treasury Yield, on a 10-year note, fell on Friday. It dropped for the third consecutive session, sinking to 1.46%, which put additional pressure on the US dollar, and pushed the yellow metal higher for the day. After declining continuously for the previous three weeks, gold managed to close the week with a 0.4% gain, on the back of high demand for safe-havens, amid the increased uncertainty in the market relating to the economic outlook. However, even so, the gains in gold were limited, due to the prospect that the US Fed might still wind down economic support this year.
Outlook – Quick Economic Indicators
On the data front, at 17:30 GMT, the Core PCE Price Index for August came in, showing a surge to 0.3%, against the forecast of 0.2%. This supported the US dollar and further capped the gains in the yellow metal. Personal income remained flat at 0.2%. Personal spending increased to 0.8%, against the projected 0.7%, which also boosted the US dollar and limited the upward momentum in gold prices. At 18:45 GMT, the final Manufacturing PMI was released. It also remained flat, in line with the expected reading of 60.7. At 19:00 GMT, the ISM Manufacturing PMI figures came in, indicating an advance to 61.1, against the expected 59.6, also providing support for the US dollar, and capping the gains in gold.
The Revised UoM Consumer Sentiment rose to 72.8, against the predicted 71.0, bolstering the US dollar. Construction spending fell to 0.0%, compared to the expectations of 0.3%, which weighed on the US dollar and added to the gains in gold. The ISM Manufacturing prices increased to 81.2, against an estimated 78.1, providing support for the US dollar, which reduced the gains in gold. The Revised UoM Inflation Expectations for September dropped to 4.6%, from 4.7% in August.
Meanwhile, gold also gathered strength from the worries and uncertainty surrounding inflation, and a possible slowdown in growth. Furthermore, the soaring energy prices, due to a crunch in China and Europe, also played an important role in keeping gold higher on Friday.
Gold Price Forecast – XAU/USD Supported Over $1,758
On Monday, the precious metal, gold, is trading with a bullish bias at 1,762. It is gaining immediate support at the 1,758 level, extended by an intraday pivot point level. The closing of candles above this level supports a bullish trend in GOLD.
While a further upward trend would expose the metal to the next resistance level of 1,766, further to the upside, the next resistance for gold will prevail around levels of 1,772 and 1,781.
Daily Technical Levels
Support Resistance
1,760.89 1,766.34
1,758.12 1,769.02
1,755.44 1,771.79
Pivot Point: 1,763.57
Taking a look at the lower side, the downward trendline is working as a support for gold. It may trigger a bounce-off in gold prices above the 1,758 level. However, a bearish breakout below this level could trigger a sell-off until 1,743 and 1,737. Let’s consider taking a buy trade above the 1,758 level and vice versa. Good luck!
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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