Gold Consolidates As US Jobless Claims Dip to 40-year Low

Gold continues consolidation around $1250 an ounce after a rapid plunge of more than $100 during last couple of weeks. The technical bias remains extremely bearish because of a Lower Low in the recent downside move.

Technical Analysis

As of this writing, the precious metal is being traded around $1255 an ounce. A support may be noted around $1250, the horizontal support ahead of $1241, the swing low of the recent downside move and then $1200, the psychological number as demonstrated in the given below daily chart.

On the upside, the precious metal is expected to face a hurdle near $1262, the intraday high of yesterday ahead of $1300, the confluence of the psychological number as well as the horizontal resistance area and then $1310, another major horizontal resistance. The technical bias will remain bearish as long as the $1342 resistance area is intact.

Initial Jobless Claims

The number of Americans applying for first-time unemployment benefits held at a four-decade low last week, a sign employers are holding on to workers as the labor market tightens. Initial jobless claims, a proxy for layoffs, were unchanged at 246,000 in the week ended Oct. 8, the Labor Department said Thursday. The latest two weeks registered at the lowest level since November 1973. That suggests employers are anxious to hold on to workers, even though their pace of hiring has slowed since last year.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal could be a good strategy if we get a valid bullish reversal candle around current levels.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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