Market analyst Anil Panchal notes that gold saw some selling in the first half of Tuesday’s session, eroding some of the previous day’s gains, bringing it closer to several-week highs. Cryptocoin. com, gold retained its price tone during the early European session and was last seen flirting with daily lows around $1,800. The dollar index (DXY), on the other hand, gained some momentum for the second day in a row, breaking away from the one-month lows it touched on Monday. The analyst says this is a key factor acting as a headwind for dollar-denominated commodities, including gold.
Risky mood supports gold price to stay strong, according to analyst
Analyst Anil Panchal states that the expectations for early policy tightening by leading central banks have contributed to the diversion of flows from the non-yielding yellow metal, and that the dominant risk-taking mood has emerged as another adverse factor for the safe-haven gold. However, concerns over the imposition of damaging quarantines in China could deter traders from placing aggressive bets and help limit deeper losses for the precious metal.
The analyst says that even from a technical perspective, the overnight close above the confluence of the 100/200-day SMAs supports bullish traders and raises expectations for dips to emerge at lower levels. Therefore, the analyst reminds that it is prudent to wait for a strong sales follow-up before taking a position for any depreciation movement.
Market participants are now looking forward to the Conference Board’s US k report, which includes publications on the Confidence Index, Richmond Manufacturing Index and New Home Sales. According to the analyst, these data, along with US bond yields, USD price spikes and broader market risk sentiment, could provide some impetus to gold prices. Gold is consolidating recent gains around $1,805, reviving intraday lows in early Tuesday after a five-day uptrend. The analyst makes the following assessment:
While a risky mood has supported the yellow metal to stay stronger lately, the recovery of the US dollar is pushing buyers ahead of the key data/events of the week.
“US Treasury rates put pressure on gold prices”
Recovering from a new monthly low, DXY maintains its advances from the previous day near 93.90 at press time. According to the analyst, the hawkish Fed statements and the period of obscurity before the preliminary forecast of US 3rd quarter GDP casts doubt on optimists and leads cautious traders to the dollar. Recent positive US Treasury rates have recently added to the strength of DXY and put pressure on gold prices. However, the US 10-year Treasury yields recorded a rapid two-day decline, close to 1.64% at the latest.
The market sentiment remained stronger the previous day, joining the positive headlines of China’s Evergrande and Tesla’s new record, as statements from US President Joe Biden and House Speaker Nancy Pelosi boosted stimulus hopes. Meanwhile, S&P 500 Futures posted slight gains as of press time, while Wall Street benchmarks revived their all-time high.
Gold traders could be delighted with second-tier data such as US Consumer Confidence and Durable Goods Orders, given the lack of significant data/events ahead of Thursday’s US GDP. These data will be important regarding US Treasury interest moves and headlines from China, as well as US stimulus.
Technical analysis: Main hurdle from descending trendline is broken to the upside
Market analyst Anil Panchal states that despite the recent decline, gold price continues to break the main hurdle consisting of the 200-DMA and a descending trend line since the beginning of June, and currently finds support around $1,793. He makes the following analysis:
Not to forget the continued trading beyond the metal’s $1,800 threshold, given the ascending MACD signals and the absence of overbought RSI conditions, gold fiadollaryellow is rapidly moving towards the $1,834 resistance, which contains the highs since July. During the price move to the upside, the round figure of $1,834 will target $1,900, and the mid $1,800 will likely seek out gold buyers.
Should the recent declines push gold below $1,793, the bulls may not lose hope until the commodity moves beyond the monthly support line (around $1,777 by press time). The analyst predicts that overall, gold will hover around $1,834 to please the bulls before the next test.