Gold sees significant drop, US 10-year bond yield at a 16-year high【October 2, 2023】

October 02, 2023

Markets Analysis

Fundamental Analysis

  • Gold drops below USD 1900, intensifying its decline.
  • US 10-year bond yield is at its highest level since 2007.
  • US government avoids shutdown, US inflation index slows.

XAUUSD Technical Analysis

Analyzing the daily chart of gold prices. Breaking below $1900, recording a decline for 5 consecutive days. The US 10-year bond yield reaching its highest level in 16 years has been a major factor for the selling pressure on gold.

In the Bollinger Bands, movement between -2σ and -3σ and a band walk indicating the trend are formed. In this band walk, the -2σ line is likely to act as a resistance line. Unless this line is exceeded, the selling trend is expected to continue. The MACD forms a histogram of valleys, which is growing larger.

From past data, $1825 and $1810 can be highlighted as major support lines. Also, the RSI is at 29, which is an oversold level. Therefore, we would like to anticipate profit-taking actions once it goes above 30.


Day Trading Strategy (Hourly)

Analyzing the 1-hour chart of gold prices. The 120MA, 72MA, and 24MA form a perfect downward order, confirming the continuation of the downtrend.

Although the RSI once rose, after exceeding 50, it returned to around 30, indicating the end of the first rebound and signs of another decline. Fundamentally, there is strong downward pressure, and a drop to $1825 or $1810 is conceivable.

For day trading, the approach is to sell on rebounds. Entry point is set at $1862, target at $1830, and stop loss at $1876.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

$1871 … Key resistance line.
$1825 … Key directive line.


Market Sentiment

XAUUSD Sell: 15% Buy: 85%

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
Bank of Japan’s Short-Term Economic Survey8:50
ISM Manufacturing Purchasing Managers Index23:00
Remarks by Chairman Powell of the Federal ReserveMidnight

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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