Update: Gold (XAU / USD) accelerates the three-day uptrend while declining to $ 1,766, down 0.16% during the day, early Monday.

The rebound in the US Dollar Index (DXY), amid volatile Treasury yields and lightly offered stock futures, could be blamed for the latest consolidation in gold prices.

While US President Joe Biden’s drive to curb demand on infrastructure spending initially boosted market sentiment in Asia, fears Republicans might reject the move have weighed on risk appetite in recent times. .

Bloomberg’s news citing another Chinese real estate developer Fantasia missing more than $ 200 million in bond payments could also be a challenge to the mood.

Adding to anxiety over the US stimulus and China’s headlines, the cautious mood ahead of the Reserve Bank of Australia (RBA) monetary policy meeting and the US ISM services PMI for September exert further downward pressure on XAU / USD prices.

End of update.

Gold (XAU / USD) holds its head high at around $ 1,770 during a four-day uptrend through Tuesday’s Asian session. The yellow metal is encouraging the weak US dollar to consolidate September’s losses while confirming a bullish chart pattern to target the key near-term obstacle near the $ 1,800 level.

The US Dollar Index (DXY) started the week with the same old pullbacks and fell for the third day in a row to settle around 93.80 at the end of New York on Monday.

While the risky mood and waning Fed chatter is still relevant, China and the market’s search for new clues, as well as the lack of clarity on the U.S. stimulus and the extension of the ceiling on the debt, seemed to have underpinned the DXY pullback and gold recoveries.

Market sentiment deteriorated as secular tensions between the United States and China gained additional momentum after the United States condemned Chinese activity near Taiwan. Added to the chapter are comments from US Trade Representative (USTR) Katherine Tai, who cited Beijing’s failure to meet the goals of the first phase of the agreement.

Additionally, the suspension of trading in Evergrande stock in Hong Kong has sparked discussions that distressed real estate is willing to sell property to pay off debt.

In the United States, Republicans have rejected Democratic pressure for a bipartisan deal on the infrastructure stimulus bill and extending the debt ceiling. Policymakers have until Oct. 18, according to Treasury Secretary Janet Yellen before witnessing empty pockets and fears for government offices.

It should be noted that the Fed’s chatter has likely lost importance in recent times and therefore failed to support the US dollar, although policymakers are bullish. The same helps gold to prolong recovery movements.

Against this backdrop, Wall Street closed in the red and yields on 10-year US Treasuries edged up, but the US Dollar Index (DXY) remained under pressure for the third day in a row. Additionally, the S&P 500 Futures begins trading on Tuesday with slight gains at the latest.

Looking ahead, the US ISM Manufacturing PMI and the Markit PMI final reading for September will be important to watch for further momentum, but the headlines regarding China and Evergrande should not be missed.

Read: September US ISM Services PMI Snapshot: Eyes on Inflation and Employment Details

Technical analysis

Gold remains firmer after confirming a five week old bearish wedge chart pattern after a key start to the week.

Given the ability of the MACD line to offer a bullish cross, coupled with confirmation of the bullish formation, gold buyers are likely to attempt a power play and aim for the late September peak around $ 1,787. .

It should be noted that a convergence of 200-DMA and 50% Fibo. near $ 1,802 will be a tough puzzle to break for gold buyers, a breakout of which will challenge the “double highs” of $ 1,834.

Alternatively, pullback moves may aim for a 23.6% Fibonacci retracement (Fibo.) From June-August to the downside, around $ 1,741, but the formation’s support line indicated near $ 1,718 will rebound. in question any further weakness in gold prices.

In a case where gold bears hold the reins above $ 1,718, the $ 1,700 threshold will test them before the annual low around $ 1,687.

Gold: Daily chart

Trend: expected withdrawal

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