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  • Gold prices have jumped towards $1,520 after weak US ISM Non-Manufacturing PMI.
  • XAU/USD is trading above the 50, 100, and 200 SMAs on the four-hour chart.
  • The precious metal faces three critical resistance levels on the way up.

Fears of a US recession are growing after ISM’s Purchasing Managers’ Index for the Non-Manufacturing sector (services) has dropped to 52.6 points in September – the worst in three years – and indicating a slowdown in America’s largest sector. The data join weak figures for the manufacturing sector – which is already contracting.  

Markets have responded with a flow from stocks to safe-haven bonds. The resulting fall in yields implies higher chances of monetary stimulus by the Federal Reserve in its upcoming decision. The Fed may cut rates and perhaps even resume the bond-buying program.  

Gold Technical Analysis

Gold technical analysis October 3 2019

Another safe-haven that is gaining ground is Gold. The price of the precious metal jumped from around $1,504 to $1,518 before stabilizing. On its way up, XAU/USD leaped above the 50, 100, and 200 Simple Moving Averages on the four-hour chart. Upside momentum has accelerated and the Relative Strength Index (RSI) remains below 70 – still below oversold conditions.

The next resistance level to watch is $1,523, which capped XAU/USD in mid-September. It is followed by $1,528, which separated ranges later that month. Finally, $1,534 was the peak toward the end of the month.

Support awaits around $1,500 – the confluence of the 50 and 100 SMAs and the base for the current rise. Next, we find $1,485, which supported the yellow metal several times in September. Finally, the early-October swing low of $1,455 is the next level to watch.