Gold Falls After Strong U.S. - 4 October 2018

Gold prices fell $6.12 an ounce on Wednesday as the dollar rallied on the back of better-than-expected economic data. The private sector added 230000 jobs in September, according to the ADP’s National Employment Report. The Institute for Supply Management said its index of non-manufacturing activity jumped to 61.6 from 58.5 a month earlier. Market participants are awaiting the Labor Department’s nonfarm payrolls report, due out Friday.

Some chart-based selling was also behind gold’s 0.5% decline yesterday. XAU/USD was unable to pass through the 1208 level and as a result, prices returned to the 4-hourly Ichimoku cloud that should act as an effective support. The Tenkan-sen (nine-period moving average, red line) and Kijun-sen (twenty six-period moving average, green line) are flat on the daily chart to suggest sideways trading action in the near term.

XAUUSD Daily

To the upside, the initial resistance sits in 1202/0, and that is followed by 1208. Beyond there, the 1214-1212.40 zone stands out as a solid resistance. If this resistance is broken, look for further upside with 1218 and 1226-1224.50 as targets. The bears have to drag prices below 1196 to visit 1193. A break below 1193 indicates that XAU/USD will retreat to 1190-1189, the bottom of the 4-hourly cloud. If this support gives way, the market will be aiming for 1187/5.

XAUUSD h4

Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.