Historically, October has been a volatile time for equities and a muted month for gold. The yellow metal has typically shown weakness during the month, but this time it was different on account of recession fears.
Technical charts show we may see gold’s safety increase as there was recently a crossover of 50 and 200 DMAs on the hourly chart on September 20, as gold rallied from $1,503 to $1,534. The cross below was seen on September 27 and gold crashed from $1,505 to $1,459 level and once again on Oct 4, it developed a cross over at $1,510. Another positive sign for gold would be that it has been trading above the 15-DMA on the daily chart. It has also closed above 50-DMA, showing signs of strength.
Thus, both fundamental and technical factors are favouring gold on the long side. US Fed’s rate cut would acknowledge a slowdown in the US economy. As of October 4. US non-farm payroll came in at 136K against an expectation of 145K and previous record of 168K. This shows a slowdown in hiring, manufacturing as well as in services sector.
Goldplat plc (LON:GDP) is an AIM-listed, profitable gold recovery services company with two market leading operations in South Africa and Ghana.