Gold fiadollaryellow is struggling to recover from daily lows near $1,795 on Monday. According to market analyst Rekha Chauhan, the decline in benchmark US Treasury bond yields supports the current upward movement in fiadollarsars.
“The strength of the dollar keeps precious metals under pressure”
The weak stock market, concerns about the rapid spread of the coronavirus delta variant and its impact on the global recovery continue to support near lows, according to analyst Rekha Chauhan.
The analyst states that gold takes cues from the main central bank’s views on contraction and stimulus, and comments:
Official hawk comments from the Fed point to a contraction before the end of this year and are putting pressure on the upside. This, in turn, helped the dollar gain traction. The strength of the US dollar keeps precious metal gains in check. A higher USD valuation makes gold more expensive for holders of other currencies.
Gold struggling below $1,800
Cryptocoin. com, gold pricesyellow is struggling below $1,800 after the previous week’s bearish momentum. Rekha Chauhan says gold prices are struggling to hold the psychological $1,800 level amid expectations for the US Fed’s tapering timing and a stronger US dollar. The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of six major currencies, remained strong above 92.50, while benchmark US 10-year Treasury yields rebounded after higher-than-expected US inflation. The US Labor Department released its Producer Price Index (PPI), which rose to 0.7% in August after rising 0.1% in July. This rate was above the market expectations of 0.6%.
The precious metal is generally regarded as a hedge against inflation. But higher U.S. Treasury yields translate into higher opportunity costs to hold interest-free gold. Traders assess that the data may force the Fed to tighten monetary policy sooner than expected. However, gold prices yellow failed to find traction after high inflation data.
Fed hawks are on the rise
Hawkish Fed members continue to put pressure on gold prices. Philadelphia Fed President and CEO Patric Harker said the FOMC should start shrinking soon this year, joining other members. Cleveland Federal Reserve Chair Loretta Mester said she would support the central bank’s plan to cut asset purchases this year.
The comments are that Fed members’ hawkish views on contraction measures from the previous week are advancing. Adollarsanta Fed Chairman Raphael Bostic said the company is in a relatively strong position and it would be appropriate to cut back on its bond-buying program this year. Additionally, last week, the European Central Bank (ECB) kept interest rates at historic lows of 0.00%, but said it would slow the pace of pandemic bond purchases for the rest of the year.
Gold price technical analysis: Unable to maintain upside momentum
Analyst Rekha Chauhan noted that gold fiadollar yellow has extended its upward rally from its lowest level of $ 1,687.78 on August 9 to $ 1,834.02 on September 6 last week. It says a pullback below the 6 Fibonacci retracement level at $1,800.
Rekha Chauhan continues her technical analysis of gold, pointing to the following levels:
The Harekedollary Mean Divergence of Convergence (MACD) is above the midline but showing a bearish trend. Any dip in the MACD indicator will confirm the downside momentum with an immediate downside target placed at the 38.2% Fibonacci retracement level of $1,777.11. Alternatively, the formation of a Doji candlestick signals indecision among traders. If Fiyadollarsar reverses the direction, the first upside target will appear at the previous session’s high at $1,803.94, followed by the horizontal resistance area of $1,810.