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Gold price held steady in Monday’s opening session despite strengthening US dollar. Measuring the US dollar against a basket of currencies, DXY rallied for the third week in a row on Friday as uncertainty over besieged Chinese property developer Evergrande helped the dollar rebound from the previous session’s sharp decline. At the time of writing, gold was trading at $1,749, which is close to where it left off on Friday.

Golden fiadollaryellow in the perspective of global developments

According to technical analysis by market analyst Ross J Burland, DXY is sitting in bullish territory near 93.29 following the saadollarsik 20/50 EMA crossover after crossing the 200 saadollarsic flattened MA. The analyst says that investors will eagerly watch the critical resistance of the 94 level.

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As we reported , the safe-haven US dollar rebounded from the biggest one-day percent drop in nearly a month on Thursday after Beijing injected new cash into the financial system. At the same time, Evergrande Group, which has $305 billion in debt and cash-strapped, has announced that it will pay interest on onshore bonds, increasing risk sensitivity.

But Evergrande missed Thursday’s deadline to pay $83.5 million, prompting investors to question whether it will pay before the 30-day grace period ends. Fears are that the company’s default could create a wider range of systemic risks, including to China’s financial system and offshore markets. The Evergrande debt resolution story is far from clear and until a full debt restructuring is announced, markets are likely to remain tense and vulnerable to the headlines surrounding the fiasco, which is expected to bolster the dollar, according to analyst Ross J Burland.

Fed falconing after dot chart?

Meanwhile, the Federal Reserve is getting closer to tapering and raising interest rates, as the US dollar falters as a safe-haven. On Friday, Kansas City Fed President Esther George said the U.S. labor market has already met the test of the central bank to cut monthly bond purchases. This was a repetition of the words of Fed chair Jerome Powell, who spoke at a virtual press conference after last week’s Fed meeting.

This meeting was particularly hawkish due to the Fed Dots (dot chart) showing a tightening cycle that far exceeds anything pricey in money markets. This led to significant ETF liquidations of gold contracts if they were delayed, and the increased US 10-year yield dampened demand for non-yielding gold. Additionally, Cleveland Fed Chairman Loretta Mester on Friday reiterated sentiment for tapering this year and said the central bank could start raising rates by the end of next year if the job market continues to improve as expected. In this regard, there have been a number of Fed speakers attending conferences on both sides of Adollarsantik this week.

Analyst: As long as gold price stays below $1,760, divergence is bearish

Meanwhile, markets are focusing on US consumer confidence, personal income and September ISM Manufacturing data this week. On the subject, TD Securities analisdollarseri makes the following assessment:

Looking forward, the stagflation narrative still preoccupies the market as participants look to a period of high inflation and slowing growth, but this has not yet translated into additional interest in gold.

gold price 4 hourdollarsic chart

Analyst Ross J Burland states that while gold is trading in bearish zones, it remains below a confluence zone near $1,760 and analyzes the weekly chart as follows:

“According to a 4-hours chart, the price is bearish when below the 200 EMA and the divergence of the 50 and 20 EMA. The price is trying to retest the 20 EMA, which could take a little longer. However, as long as gold price stays below $1,760, and the RSI stays below 50, the divergence is on the downside. ”


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Michael Lewis

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