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Golden fiadollaryellow starts the key week on a positive nodollar with fiyadollarsar close to $1,793, with 0.3% intraday gains flashing latest. The yellow metal caught a four-week upward trend in the previous week, with the Fed’s contraction concerns increasing. Even so, recent easy US Treasury yields are joining technical support to trigger a corrective pullback, according to analyst Anil Panchal.

PPI data supported tapering views

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As we reported , the US Producer Price Index (PPI) data came in above expectations, while the hawk comments of Philadelphia Federal Reserve Bank Chairman Patrick Harker against the Fed’s concerns about tapering on the table followed the data. The policy maker recently said during a Nikkei interview:

I support moving towards a contraction process sooner or later. When exactly that happens, the committee has to decide. Hopefully this year we can start a tween reduction process.

Golden pricesyellow watches global developments and data to find direction

Elsewhere, Typhoon Chanthu in China and the lingering coronavirus woes are adding to geopolitical challenges from North Korea to keep traders on the sidelines. Alternatively, US encouragement, easing of Iran and Sino-American struggles add to the vaccine optimism to cite positive catalysts. Meanwhile, the US Democrats seem ready to ease their previous demands to advance President Joe Biden’s $3.5 trillion stimulus. Joe Biden’s six-step strategy and US-China talks after months of silence bolster market sentiment and commodity prices. In addition, International Atomic Energy Agency (IAEA) President Rafael Grossi recently visited Tehran and returned with the good news of signing an agreement with Iran to solve the “most urgent problem” between them.

Amid these developments, the US Dollar Index (DXY) rose for the second day in a row, ignoring the slowing Treasury yields. Analyst Anil Panchal emphasizes that bond buyers are looking for a buffer in case coupons bounce and thus reverse the recent rise of gold.

A mild calendar on Monday allows gold prices to consolidate last week’s losses. However, the US Consumer Price Index (CPI) and August Retail Sales will be crucial as further strength in headline data will support declining concerns and put pressure on gold prices.

gold fiadollaryellow technical analysis

Analyst Anil Panchal states that an upward sloping trend line from August 13, even as the 100-SMA challenged the upward momentum, protected gold buyers and showed a range between $ 1,783 and $ 1,804. He continues his analysis on the chart in the following direction:

Golden fiadollaryellow: Four houradollarsic chart / Trend: Further recovery expected

Also, the 50-SMA surrounding $1,807 is acting as an upside barrier. Given the tighter RSI and continued trading beyond the short-term key support, gold buyers have the upper hand as long as the price does not drop below the stated trendline support at $1,783. In a situation where the gold price drops below $1,783, the 50-SMA could break below the 100-SMA, which could expand the downside momentum towards the five-week horizontal support around $1,760-58. The $1,724 and $1,700 thresholds act as extra support before leading gold sellers to an annual low of $1,687.


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Michael Lewis

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