XAU / USD dips below $ 1,800, decline appears limited

• Risk appetite sparked further selling around safe-haven gold on Tuesday.
• Aggressive expectations from the Fed put even more pressure on the unperforming XAU / USD.
• New nerves from COVID-19, concerns about global economic growth helped limit losses.

Gold (XAU) added to its intraday losses and weakened further below $ 1,800 during the early days of the American session. The XAU / USD has now reversed a major part of the previous day’s positive move towards the six-week highs and was last seen flirting with the confluence resistance break point of the 100/200 day SMA. Risk appetite in the markets was seen as a key factor affecting demand for traditional safe haven assets and put some pressure on the safe haven precious metal.

Meanwhile, the latest leg of a sudden drop over the past hour could be attributed to a modest strength in the US dollar, which tends to undermine dollar-denominated commodities, including gold. The USD got some support from rising US Treasury yields, bolstered by prospects for an early Fed policy tightening. Markets have been weighing the possibility of a possible hike. of interest rates in 2022 amid concerns about a faster-than-expected rise in inflationary pressures.

technical perspective

From a technical perspective, gold, so far, has managed to defend the confluence resistance break point of the 100/200 day SMA. The aforementioned resistance-turned-support, currently around the $ 1,795-90 zone, should act as a key point for short-term traders. A convincing advance, leading to a subsequent drop below the horizontal support at $ 1,782, will shift the bias in favor of bearish traders. The XAU / USD could accelerate the decline towards the next relevant support near the $ 1,760 region before eventually falling to monthly lows, around the $ 1,746-45 zone.

On the other hand, the $ 1,810 zone, closely followed by multi-week highs around $ 1,814 now appears to act as immediate resistance. Some subsequent purchases should set the stage for an extension of the recent appreciation move and push gold past the $ 1,825-26 intermediate hurdle. The bulls could eventually aim to challenge the large $ 1,832-34 bid zone, which has been acting as a strong barrier since mid-July.

Levels to watch