- Gold price remains on the defensive after reversal from the 21 SMA.
- The dollar rallied to reverse Asian session losses amid mixed concerns.
- Yields remain lower in the absence of words from the Fed and pre-data anxiety.
- XAU/USD may remain on the sidelines ahead of CB Consumer Confidence and US Q3 GDP.
The price of gold (XAU/USD) remains directionless as it bounces off the intraday low of $1,650 at the start of the European session on Tuesday.
That said, the yellow metal attracted buyers earlier in the day amid a softer dollar, but the latest dollar bounce seems to have weighed on XAU/USD. Keep in mind that the negative concerns surrounding Chinaone of the world’s largest gold consumers, also question the price of the precious metal.
DXY Dollar Index rallies to reclaim 112.00 level, while paring initial weekly loss, amid no Fed statements. Keep in mind that unfavorable Federal Reserve statements and US PMIs also support the safe-haven demand for the dollar.
China’s efforts to defend the struggling economy and global pessimism about Xi Jinping’s third term, not forgetting the fall of the Hang Seng to its lowest level in 13 years, put downward pressure on market sentiment and XAU/USD prices.
Amid these plays, 10-year US Treasury yields remain under pressure around 4.21%, down two basis points (bps), while US equity futures and indexes the Asia-Pacific region are slightly down.
Elsewhere, US housing data and BC consumer confidence may entertain gold traders ahead of the release of US Gross Domestic Product for the third quarter on Thursday.
Technical analysis
Gold pulls back inside a two-week bearish channel. That said, the recent bearish RSI and the price’s retracement from the resistance line of the pattern directs it towards the support of the 100 EMA near $1,645.
However, a continuation of the metal’s decline looks difficult as the yearly bottom near $1,614 and the bottom line of the channel, near $1,608, could challenge XAU/USD bears. The level of the $1,600whose breakout could lead the yellow metal towards the April 2020 low near the $1,572.
Meanwhile, the upper line of the channel and the 61.8% Fibonacci retracement of the rally from September 28 to October 4, around the $1,658-$60seem like a tough nut to crack for gold buyers.
Overall, gold prices are likely to remain under pressure, but the move down could be slower.
Gold 1 hour chart
Trend: Further weakness expected
Source: Fx Street
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