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Gold prices are heading towards their second weekly losses on yellow on Friday. After observing a massive one-day drop in the night session, fiyadollarsar is stabilizing for a bit around $1,750. A slight decline in the US dollar supports the recent consolidation in fiyadollarsars. This is also a key factor that helped gold gain some positive momentum and retrace some of the overnight drop to its lowest level since August 12, according to market analyst Haresh Menghani.

“Expectations of an imminent Fed tapering announcement keep bulls from acting aggressively”

Haresh Menghani says concerns over the fast-spreading Delta variant and the global slowdown are acting as the tailwind of safe-haven gold. However, the analyst notes that the prospects for an imminent Fed tapering announcement are keeping the bulls from trading aggressively and holding any meaningful upside cap for the unyielding yellow metal. Cryptocoin. com Thursday’s optimistic US Retail Sales data underlined consumer confidence and pointed to the continuation of the k recovery. According to the analyst, this has strengthened market expectations that the Fed will eventually begin to retract its major crisis-era stimulus sooner or later.

So the next most important event for gold prices will be the FOMC meeting on September 20-21. Haresh Menghani states that this meeting will ultimately play a key role in influencing near-term USD price spikes and will help determine the next leg of a directional move for gold.

Meanwhile, any meaningful recovery attempts are more likely to face stiff resistance and remain limited near the strong horizontal support breakout at $1,780. The mentioned region marks the lowest levels of previous monthly fluctuations and should now act as an important turning point for short-term traders.

Caused heavy sales under strengthening DXY

According to market analyst Haresh Menghani, the heavy sell-off in gold on Thursday was supported by the high US dollar index, which hit a two-week high of 92.90 after higher-than-expected Retail sales data.

The analyst also says that investors are being cautious ahead of the US Federal Reserve meeting next week, adding that he expects the market to provide future guidance on the timeline of the central bank’s asset purchase program and the eventual interest rate hike. The analyst’s assessment is as follows:

Earlier in the week, a softer US Consumer Price Index (CPI) eased inflationary anxiety, helping gold prices test a one-week high. However, higher USD valuations kept the pressure on the precious metal. ETF flows remained weak, with SPDR GOLD Trust’s holdings down 0.2% to 998.46 tonnes on Wednesday.

Global developments and their possible effects on gold prices

The precious metal plunged its biggest drop since August 6 the previous day amid growing discussions about the Fed’s contraction next week. Bets on the Federal Reserve’s consolidation of expansionary monetary policies gained momentum as August’s US Retail Sales and September’s Philadelphia Fed Manufacturing Index came in better-than-expected and earlier. However, US Retail Sales jumped to a five-month high, beating expectations of -0.8% monthly by +0.7%. Also, the Philly Fed indicator rose strongly to 30.7 against the previous 19 forecasts and 19.4, pointing to the strongest figures in three months.

However, Reuters’ latest 51st poll pulled tapering back to its November meeting, citing inflation concerns. The survey also points to the negative impact of the Delta covid variant on the US 3rd Quarter GDP. In addition to the conventional crises that have eased recently, a tweet from Fox News’ Chad Pergram is helping the commodity recover. The reporter said that “WH Biden, Pelosi and Schumer spoke by phone today about social spending.” Prior to that, Axios came out with the news that “President Biden failed to persuade Senator Joe Manchin (D-W. Va.) at Wednesday’s Oval Office meeting to agree to spend $3.5 trillion on the Democrats’ budget reconciliation package.” Analyst Haresh Menghani comments on the impact of the developments:

Looking ahead, US stimulus, Fed and covid-related headlines, China aside, could amuse gold traders and possibly prolong the corrective pullback. However, preliminary data for the September Michigan Consumer Sentiment Index projected at 72.2 out of the previous 70 will be key data to watch today and can help better predict the Federal Open Market Committee’s (FOMC) actions next week.

“Gold fiadollaryellow exhibits short-term movementollarser which is insufficient to recall metal buyers”

Market analyst Haresh Menghani states that the gold price has bounced off the 2.5-month wide horizontal support area, but the downside break of the rising trendline support the previous day now remains as resistance. With bearish MACD signals and continued trading below key moving averages participating in Thursday’s support breakout, golden bears remain in check unless price bounces back beyond resistance turned into support around $1,786, according to the analyst. Haresh Menghani continues his analysis:

Even so, the 50-DMA and 200-DMA at around $1,796 and $1,808, respectively, are forcing buyers before heading towards the main horizontal hurdle around $1,834. Meanwhile, gold sellers can wait for a downside break of $1,750 to get fresh entries targeting $1,738. Following that, $1,717 and $1,700 could entertain the bears before the annual bottom near $1,687. In general, gold fiadollaryellow exhibits short-term movements that are insufficient to recall metal buyers.

Gold price: Daily chart

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Michael Lewis

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