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Gold traders await FOMC meeting and NFP report

4 November 2021

Gold remained active in the previous week as it reversed its upward trend and closed the week in red territory. Despite this happening the price action did not impress as traders maybe more selective with their orders during this specific time of the year. During this week the Gold market turns its attention to some crucial economic events which are definitely to keep traders in anticipation. This report aims to identify and analyze previous and upcoming happenings that could create volatility for Gold’s price. We will be concluding with Gold’s technical analysis attempting to form a clear and direct viewpoint of the possible price movement as we aim to fully support traders.

Two of the most active days for Gold’s price in the previous week, came on the 26th and the 29th of October. Studying the movement of both these daily sessions, we can determine what motivated traders, possible similarities and keep these observations in mind for the sessions to come.

Both the sessions on the 26th and the 29th of October ended with Gold moving lower while the selloff had started in the early US session and was extended further into the main part. On the 26th the US Consumer Sentiment for October came out stronger than expected which could have invited some bearish tendencies for Gold. On the 29th a similar movement was displayed but had not been justified with financial releases for the day sending mixed signals. Yet traders on Friday may have also been affected by the media’s analysis and expectations for the days ahead.

In the following days, we emphasize the upcoming economic events from the US that are to be taking the spotlight forming a very interesting week. On the 3rd of November, the FOMC meeting and the accompanying press conference where Chairman J. Powell is to speak are among the star events of the week and will be targeted by Gold traders. The FOMC is expected to keep its interest rate unchanged at 0.125% with a probability of 98.6% for this scenario to materialize. The Interest rate release and the press conference are expected to move the market thus Gold traders are advised to be mindful of the risks or opportunities to appear. Some of the subjects that could be of great significance in the FOMC meeting are the taper announcement, when the bank’s QE program could end and hints on upcoming rate hikes.

These matters can create waves across the market especially if unexpected data is to become public. In our opinion there is no straight forward view on the outcome of the FOMC meeting. Price action could swing as we expect buyers to join the markets if a substantial dip is to prevail, while the sellers could be joining the market in a substantial jump higher.

On the other hand on Friday the 5th of November we get the much anticipated US employment report which is also a great event for traders to work with. With the unemployment rate expected to drop and the NFP figure anticipated to rise substantially, we could say this event has the potential of producing noteworthy volatility for Gold’s price action. If the forecasts are to be realized then we can see Gold’s price heading lower. At the same time, traders should note that contradicting data can create varying scenarios of price movement. Thus gold traders are advised to observe with caution as the market reacts to the NFP report on Friday. Also in the following days on the 3rd of November we get the US Trade Balance for September and the ISM non-Manufacturing PMI for October while on the 4th we get the weekly initial jobless claims figure.

As a final note, Gold traders should also keep an eye on the upcoming BOE interest rate decision for the 4th of November as a possibility for a rate hike is imminent and could be of interest to the Gold market. In addition the 10 year bond yields are also constantly monitored by traders with some stabilization prevailing in the past days. Should however the yields make significant changes in direction then this could be reflected on Gold’s price action

Technical Analysis

Gold is currently trading nearby our (R1) 1800 resistance level which has been approached in recent sessions yet has not been tested since the past week. Above the (R1) we see the market providing some resistance at the (R2) 1815 level which was the highest price reached since early September. Yet we must also note the (R3) 1835 that remains a two month high price and could be of interest for traders with a strong bullish outlook. Our first support currently stands at the (S1) 1785 line while a notable selloff similar to the one observed on the 29th of October can send the price action to the (S2) 1770 level. Our final support remains unchanged at 1750 (S3) level which was tested immensely in the first part of October. The RSI indicator below our chart remains nearby the 50 level which indicates the market’s price action is driven by uncertainty as traders are possibly awaiting the important events in the following days. We would also like to note that most of the price action during the past 10 days has been between the (R2) 1815 and the (S2) 1785 for the past two weeks. These levels can determine the strength of either a bullish or bearish trend.


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