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Gold Price Forecast: XAU/USD bears lurking at daily moving average cloud and resistance confluence

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Gold Price Forecast: XAU/USD bears lurking at daily moving average cloud and resistance confluence
  • Gold has rallied towards last month’s highs, as the dollar and yields fall, risk picks up.
  • Gold bears are focused on the downside and a 50% mean reversal near the $1,685/75 area.

The price of gold rallied on Tuesday, posting a new high so far this week around $1,730, with traders eyeing the September high of $1,735. The yellow metal rallied from a low of $1,695.24 on the day as US yields hit fresh lows of 3,564% on the 10-year Treasury yield, while the greenback was hit by fresh disappointments. in the data.

DXY, which measures the dollar against a basket of currencies, fell from a high of 111,886 on the day to 110,870 after the following JOLTS data:

US job openings fell to nearly 10.1 million in August, according to the Bureau of Labor Statistics, below the Econoday consensus of 11.15 million and down from the 11.17 million reported in July. This larger-than-expected decline could be the first sign that labor demand is falling ahead of this week’s main event, the US Non-Farm Payrolls data. The weaker data has traders betting on that the Federal Reserve could raise interest rates less than expected as the central bank becomes more dovish as the US economy slows.

Elsewhere, and also weighing on the dollar, US equities advanced on signs that the gap between supply and demand in the labor market was narrowing, a moderate factor favoring risk appetite on Wall Street. The Dow Jones Industrial Average rose 2.7% to 30,308.63, while the S&P 500 gained nearly 3% to 3,789.49. The Nasdaq Composite rose more than 3.5% to 11,609 points, with all sectors in the green after noon Tuesday.

Still, risk appetite is back in fashion. Volatility is helping to lift the price of gold, fueled by expectations that central banks may ease the pace of monetary policy tightening, sending US equity markets posting their biggest rebound since November 2020. However, there are mixed views on whether the markets have bottomed out or if this recovery will be short-lived.

Analysts at TD Stock Securities say: “We expect this week’s nonfarm payroll data to be better than Friday’s, which could be a catalyst for a revaluation to the downside.” “Pain trading remains bearish in precious metals, and the latest positioning data highlighted that other reports have started to sell off their gold length significantly, suggesting that pressure towards a capitulation in gold is indeed building.” .

Gold Technical Analysis

On the daily chart, the price has been rejected to the upside according to the Harmonic Crab, which is a bullish pattern. The bulls are running into a potential resistance zone based on the weekly M formation and the previous month’s highs, as well as a 21/50 smoothed moving average cloud. For the day ahead, being the middle of the week, if these are going to be the highs for the week, then there will be a focus to the downside and that exposes a 50% mean reversal near the $1,685/75 area.

Source: Fx Street

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