Gold, Bitcoin, US Dollar Technical Analysis for US Election Week

Nonfarm payroll data shows an increase of 12,000 jobs in October, falling far short of the expected 106,000. This data indicates potential weakness in the labour market. On the other hand, the unemployment rate remained unchanged at 4.1%, aligning with expectations. The wage inflation increased slightly, with average hourly earnings rising to 4% from the previous 3.9%. The ISM Manufacturing PMI also declined to 46.5, indicating a deeper contraction in manufacturing activity than expected. However, the Services PMI painted a more optimistic picture, climbing to 54.8. This signals strong expansion in the services sector. These mixed signals have fueled market expectations of imminent interest rate cuts. A 25 basis point reduction is expected next week, with a high probability of an additional cut in December.

The softer-than-expected labour market data and the downturn in manufacturing highlight concerns about economic growth. However, robust service sector performance and persistent wage inflation limit the extent of this pressure. The release of this employment data caused the US dollar (DXY) to drop in the first hour, but the decline was capped by strong buying pressure, leading to a rally in the final hours before market close. The high volatility in the US dollar is due to uncertainty surrounding the upcoming US election, which is set for next week. Additionally, increased tensions between Iran and Israel ahead of the election outcome are further intensifying market volatility. Reports, such as news of Iran preparing for a strike on Israel, are escalating tensions within the region.

Market Volatility During Election Week

This week, the US presidential election on November 5 and the FOMC press conference on November 7 will be pivotal events. These events set the stage for increased market volatility. As the election unfolds, the uncertainty surrounding the outcome could drive significant fluctuations in the US dollar index. These fluctuations can impact the gold (XAU) and silver (XAG) markets. Market participants closely monitor poll results and any unexpected developments that may influence the election’s trajectory. These factors could trigger rapid shifts in investor sentiment.

The FOMC’s policy decisions and rhetoric on November 7 will be crucial in shaping market expectations. This is particularly important concerning the Fed’s stance on future interest rate cuts. Moreover, fears of regional instability in the Middle East could amplify safe-haven flows into gold (XAU) and Bitcoin (BTC). The combination of these influential events—political uncertainty and international tensions—sets the stage for a highly volatile week. This volatility is likely to affect a wide range of financial markets.

Gold (XAU) Technical Analysis

Gold Daily Chart – Short-Term Correction

The daily chart for gold shows price weakness at resistance, indicating a potential price drop this week. The red dotted trend line highlights that the price has hit strong resistance at $2,790 and appears to be correcting lower. Strong support lies at $2,690, marked by the black dotted trend line. The RSI will likely approach the mid-level as the price nears the $2,690 support. Although the overall trend for gold remains bullish, the current price correction from overbought levels is a healthy sign for the gold market.

Gold 4-Hour Chart – Short-Term Correction

The 4-hour chart for gold shows that the price is trading within an ascending channel and is correcting from the target region of $2,780–$2,800. Following the employment data release, Friday’s consolidation strengthened the bearish bias in the gold market by breaking below the midline of this channel. This suggests a potential price correction toward $2,690, which serves as the support level of the ascending channel.

Bitcoin (BTC) Technical Analysis

Bitcoin Daily Chart – Resistance at Key Level

The daily chart for Bitcoin shows strong bullish price action following a breakout from the descending broadening wedge. The emergence of a double-bottom pattern indicates further bullish potential. The price has returned from record highs to the $67,500 support level, marked by the black dotted trend line. Additionally, the 50 SMA crossing above the 200 SMA highlights positive momentum.

Bitcoin 4-hour Chart – Ascending Channel

The 4-hour chart for Bitcoin shows the formation of an ascending channel. The price is consolidating around the midline of the black ascending channel, suggesting that it is seeking direction. A break below $68,000 could push prices lower, although the trend remains upward, as indicated by the ascending channel. This week marks the U.S. election, and volatility may increase as the election unfolds.

US Dollar Technical Analysis

US Dollar Daily Chart – Rebound from 200 SMA

The U.S. Dollar Index sharply rebounded from the strong support level of 103.90 on Friday following the release of US employment data. The 200 SMA defines this support level. The key resistance for the U.S. dollar stands at 105.60. However, the dollar opened with a significant gap on Monday and has continued to trade lower. The sharp decline at Monday’s open indicates high volatility. The US dollar may continue to fluctuate in both directions as the outcome of the U.S. election unfolds. A break below the 200 SMA at 103.90 could drive the dollar to lower levels.

US Dollar 4-Hour Chart – Symmetrical Broadening Wedge

The 4-hour chart for the US dollar index shows a symmetrical broadening wedge pattern. Following the breakout of the 200 SMA on the daily chart, the price correction has been capped at the support level of 103.70. The index rebounds from this support and moves upward. The emergence of the broadening wedge pattern indicates strong price volatility driven by the outcome of the US election.