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Gold Price Trading Without Direction As NY Trading Kicks In

Gold prices
Gold prices

Gold price (XAUUSD) is trading within a tight range as the yellow metal seeks to establish a direction for the day. This has been the case with XAUUSD this week as there have been very few headlines to produce a risk-on or a risk-off market sentiment.

XAUUSD is trading at 1491.93, just off the intraday high of 1493.75, which is close to the R1 pivot and forms the ceiling of the range for the week. The floor is formed by the 1483.53 support line (in blue), which also marks the previous lows of September 10th, 13th, 30th, Oct 2 and October 16.

I expect price to continue trading within this range for another day , until the release of the Chinese GDP figure for the 3rd quarter. This economic indicator is scheduled to hit the newswires at 1am GMT on Friday morning. This news release could have major market impact following the conclusion of the first phase of the US-China trade talks, which ended with a partial deal that is yet to be made public.

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Outlook for Gold Price (XAUUSD)

The expectation is for China’s GDP to have dropped from 6.2% to 6.1%. If the Chinese GDP figure comes in higher than expected with a deviation of at least 0.1% to the upside, this is considered a good outcome and could lead to risk-on sentiment which could cause gold to be sold off. Any kind of sell-off would have to break below the ascending support trendline that connects the lows of August 1 and September 30, as well as October 11 and 13.

A lower than expected GDP figure of 6.0% and lower is considered bad and could trigger a risk-off sentiment which puts gold price on bid. 1495.13 remains the key resistance for gold price for most of the 2nd week of October 2019, and is also the R1 pivot resistance.  A break above this level targets 1500 as the initial target (R2 pivot for the day), with possibility of ascension to 1509.66 (highs of gold price action from October 3 to October 10).

Looking at the bigger picture, gold price is trading within the confines of a symmetrical triangle on the 4-hour chart. A sell-off breaks below the triangle, which targets 1471 and 1466 (October 1 low) as possible downside targets. A break of the triangle to the upside could open the door to the highs of September 6 and 23 as the initial upside target.

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