XAU/USD: gold remains under pressure

Current trend

Gold prices considerably dropped as a result of trading on Thursday, October 5, updating a local minimum since August 9. The instrument was under pressure from quite optimistic signals from the USA that supported USD and gave hope for yet another increase of the interest rate before the end of 2017. According to the futures market, after yesterday’s “hawkish” statements by the Fed’s representatives the possibility of interest rate increase in 2017 made up 86.7% against 77.5% the day before.

During the morning session on October 6 the instrument is trading in the narrow price range waiting for the release of a key report on the US labor market in September. Moreover, low volatility during Asian trading is explained by the fact that Chinese markets are closed because of a national holiday.

Support and resistance

Bollinger Bands in the D1 chart demonstrate reduction. The price range is narrowing. MACD indicator is trying to reverse upwards preserving a sell signal (the histogram is located below the signal line). Stochastic is located horizontally near the minimal levels.

Resistance levels: 1277.39, 1281.55, 1289.98, 1304.29.

Support levels: 1266.01, 1261.00, 1251.03.

Trading tips

Long positions may be opened after breaking out the levels of  1277.30 or 1281.85 with target at 1304.29 and stop-loss at 1266.01. The period of implementation is 2-3 days.

A breakdown of the level of 1266.01 may be a signal for further sales with targets at  1251.03,1247.00 and stop-loss at 1277.39. The period of implementation is 1-2 days.