- Gold managed to attract some buying on Wednesday’s dips amid the risk aversion boost.
- A stronger USD limited any significant upside potential for the dollar-denominated commodity.
- Investors also seem reluctant to place aggressive bets ahead of Friday’s NFP report.
The oro it reversed an intraday slide to multi-day lows and again approached the upper end of its daily trading range, around the 1,758 zone during the early days of the American session. Concerns that the recent surge in crude oil and energy prices will fuel inflation and derail the global economic recovery weighed on investor sentiment. Aside from this, fragile US-China trade relations, the China Evergrande debt crisis and a stagnation on the US debt ceiling triggered a new wave of risk-off global trade on Wednesday. This was evident from a strong corrective decline in equity markets, which, in turn, was seen as a key factor that extended some support to the equity markets. XAU/USD as a safe haven.
Technical levels
From a technical perspective, the recent price action within the range makes it prudent to wait for a convincing breakout in either direction before placing aggressive bets. Therefore, any subsequent recovery movement could face some resistance near the $ 1,770 region, or one-and-a-half week highs touched on Monday. The next relevant hurdle is pegged near the $ 1,774-75 region before the $ 1,783-84 zone, above which the bulls are likely to point back to regain the round $ 1,800 level. The latter coincides with the very important 200-day SMA and should act as a key point for short-term traders.
On the other hand, the $ 1,750-48 region, or the lower limit of the weekly trading range, now appears to have emerged as strong immediate support. A convincing breakout below will set the stage for a slide towards intermediate support at $ 1,729 en route to September’s monthly lows, around the $ 1,722-21 region. Some subsequent selling would make gold vulnerable to accelerate the downward trajectory and challenge the round $ 1,700 level before finally falling to multi-month lows around the $ 1,687-86 region touched on August 9.
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