Again, Gold broke through the US$1,800 mark on October 13, but after the breakthrough, it could not stand firmly above the key position of US$1,800. Instead, it turned around and fell back, almost erasing the previous gains, mainly due to the unexpectedly retail data released by the United States and the impact of rising gain in 10-year Treasury bond yields. I personally believe that the better-than-expected retail data indicate that economic activity in the US market has resumed active. It has increased the market’s expectations of the Fed’s early tightening monetary policy. It pushes the dollar to rise and weakens the attractiveness of gold.

Technically, the weekly chart 1 clearly state a large-scale horizontal pattern. In the long run, it must break through the upper $1,910 or the lower $1,676 before a clear trend occurs, otherwise it will still be viewed as the ups and downs within the large range. At the same time, it is also subject to the downward trend line since August last year. The top of gold is getting lower and lower. Under the conditions of rising US dollar and debt yields, I believe that gold is still more likely to fall in the macro-cyclical pattern. 

In terms of the daily chart: There were three tops in the top of Chart 2 and fell back. From July to September, three consecutive impacts failed and then fell back. It seems that we are preparing for the fourth impact. If we can successfully break through and stand firmly on the top three tops, the most recent 1st target will reach US$1,910, plus there is no obvious resistance limit between the three tops and US$1,910, that is, the vacuum interval mentioned in the article last month. The rise will generally be faster, but it is necessary to break through and stabilize at the top, if it rises and then falls below the three tops, it will become a false breakthrough. 

In terms of the four-hour chart: As shown in Figure 3, gold had another false breakthrough on October 18th. Up to October 21st, it failed to stand firm at the $1,800 mark, which means that the market is hesitating. Fortunately, the upward trend line has not been destroyed. Otherwise, the recent support will fall near $1,750, and the lower support will be a dense flat bottom. Based on the concept that once the multi-stop loss will be hit, it is expected that 1,750 will not be held by then. In conclusion, if gold wish to maintain as rise, the necessary condition is to maintain a stable $1,750, and the non-agricultural employment data in November will be the focus.

Hugo Leong Gold Analyst of Hantec Group