- Concerns about China’s indebted real estate sector offer some support for safe-haven gold.
- Upbeat expectations from the Fed and rally in US bond yields prop up the dollar and limit XAU / USD gains.
- Investors also appear reluctant to open aggressive positions ahead of the monthly US employment data.
The oro it has gained some positive traction on the last trading day of the week and has recouped a portion of the previous day’s losses. The XAU / USD maintains its shopping tone during the European session and has reached daily highs around the $ 1,760 region in the last hour, although it has lacked continuation. The concerns related to the indebted real estate sector in China have resisted after Fantasia Holdings – a midsize developer – failed to pay a $ 206 million bond due October 3, triggering a formal default. This, in turn, has been seen as a key factor that has provided some support for the safe-haven precious metal, although a combination of factors has limited gains.
A temporary truce in the debt ceiling stagnation in the US Congress has eased concerns about a possible default on public debt. later this month and has boosted investor confidence. In fact, the Senate voted 50-48 to extend the debt ceiling until early December. The bill will now go to the House of Representatives for approval before it can be sent to President Joe Biden for his signature. The development unleashed a classic hedgehog move for risk in global equity markets. Apart of this, prospects for an early tightening of monetary policy by the Fed should prevent investors from opening aggressive bullish positions around the yellow metal with no performance.
Investors seem convinced the Fed will begin reversing its massive pandemic-era stimulus as early as November. Markets also appear to have begun pricing out prospects for an interest rate hike in 2022 amid concerns that continued rising oil and energy prices will fuel inflation. The optimistic expectations of the Fed pushed benchmark 10-year US government bond yield at four-month highs, closer to the 1.60% level, which has continued to prop up the US dollar. This could further act as a headwind for dollar-denominated commodities such as gold as investors sidestep ahead of the US monthly NFP employment figures.
The popularly known report of the NFP will be released later at the start of the American session and is expected to show that the economy added 488,000 new jobs in September. Meanwhile, it is expected that the unemployment rate drops to 5.1% during the month reported from 5.2% seen in August. Nonetheless, the data will influence market expectations about the Fed’s next policy move. This will boost the USD in the near term and could generate a new directional boost to gold prices.
Gold technical perspective
Looking at the technical picture, the XAU /USD It has been swinging in a familiar trading range since the beginning of this week. This makes it prudent to wait for a sustained breakout in either direction before opening aggressive positions. Therefore, any subsequent move to the upside could continue to face resistance near the region of 1.770$, hitting a week and a half highs on Monday. The next relevant obstacle is near the region of 1.774-75$ ahead of the zone 1.783-84$, above which the bulls are likely to point again to regain the level of 1.800$. The latter coincides with the very important 200-day SMA and should act as a key fundamental point for short-term investors.
On the other hand, the region of 1.750-48$, or the lower limit of the weekly trading range, now appears to have emerged as immediate strong support. A convincing breakout will set the stage for a slide towards the intermediate support of 1.729$ on the way to September lows, around the region of 1.722-21$. Some continuation selling would make gold vulnerable to accelerate the downward trajectory to challenge the level of 1.700$ before finally falling to multi-month lows, around the region of 1.687-86$ headgear on August 9.
Gold technical levels
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