Gold Sideways Trading Continues – Pivot Point to Extend Resistance at 1,794
Gold Sideways Trading, During Monday’s Asian trading hours, the gold price failed to stop its downward momentum of the previous day; drawing some further offers around the $1,790 level; as the US dollar continued to strengthen; making GOLD prices weaker; Investors now await US data for further clues on the US Federal Reserve’s timetable for beginning asset tapering.
Meanwhile, the global equity markets are flashing green at the start of the week, despite the uptick in virus cases.
However, the chatter over US stimulus measures; Iran and the easing of the Sino-American tussle has positively impacted the market trading sentiment; In addition to this; the optimism over coronavirus vaccines played a major role in underpinning the sentiment in the market. As a result, the bullish market sentiment is threatening to undermine the prices of the safe-haven metal; On the other hand, the losses in the gold price were further bolstered by the low physical demand for GOLD in India during; the previous week, despite a correction in bullion prices.
Customers in most other Asian countries have also remained quiet, as they await a clearer trend in global prices. Another factor is that the latest hike in daily virus cases and fears over Typhoon Chan the reaching China’s mainland keep challenging the upbeat market mood. This, in turn, was seen as one of the key factors that kept a lid on any additional gains in gold prices. Currently; the yellow metal is trading at 1,792.90, and consolidating between 1,784.09 and 1,793.49.
Chatter Concerning Sino-American Relations & Iran’s Nuclear Deal:
Despite the faster spread of the virus variants and China’s fears of Typhoon Chanthu, the market trading sentiment maintained its positive early-day performance, and remained well bid on the day. Among these bids, the S&P 500 futures extended early gains, while the 10-year Treasury yields in the United States remained unchanged; hovering around 1.34% at the time of writing.
However, the reason could also be attributed to the continued chatter over the US stimulus measures and the easing of tension between China and the USA. As per the latest report, US Democrats showed a willingness to ease their previous demands to push forward with President Joe Biden’s $3.5 trillion stimulus. Both Biden’s 6-pronged strategy and the US-China talks favour the market trading sentiment and commodity prices; after multiple months of quietness.
Furthermore; International Atomic Energy Agency (IAEA) Chief; Rafael Grossi, visited Tehran and returned with positive news about striking a deal with Iran to solve “the most urgent issue” between them. This also had a positive impact on the market trading sentiment, and the upbeat market sentiment tends to undermine the safe-haven metal prices.
A Surge in USD Drive Selling in Gold
Gold Sideways Trading, Despite the risk-on market sentiment, the broad-based US dollar maintained its upward streak of early-day trading, remaining well bid on the day. Investors remained cautious of the US; as the Federal Reserve has started asset tapering, even though the number of COVID-19 cases continues to rise globally; The United States will release consumer price index data tomorrow, and Philadelphia Fed President Patrick Harker has joined the chorus of those calling for asset tapering to begin sooner rather than later.
So, the upticks in the US dollar kept the bullion prices under pressure; as the price of gold is inversely related to the price of the greenback. The US Dollar Index; which tracks the greenback against a bucket of other currencies, had risen by 0.10%, to 92.668 by 10:43 PM ET (2:43 AM GMT).
Looking forward, market traders will keep their eyes on the US data; which could provide further clues about the US Federal Reserve’s timetable for beginning asset tapering; Investors are keeping their eyes on the US consumer price index data; which is due on Tuesday; after Friday’s data showed that the producer price index (PPI) for August increased by 0.7% month-on-month, and 8.3% year-on-year. The core PPI rose by 0.6% and 6.7% month-on-month and year-on-year; respectively.
Gold (XAU/USD) – Technical Outlook – Pivot Point Resistance at $1,794
Gold Sideways Trading, Gold is currently trading with a positive bias, as it remains beyond a pivot point trading mark of 1,789; On the other hand; gold is expected to find immediate support near 1,782; A breakout at the 1,782 level would move gold to the next support level of 1,776; and below that; the 1,765 level will be the next support level.
The 1,792 level remains the immediate resistance for the pair. Gold prices will be exposed to the 1,798 level if a bullish breakout occurs, with the next resistance level being around the 1,811 level. The 50-period SMA (simple moving average) in the 4-hour time frame is anticipated to prolong resistance around the 1,811 level.
Finally, the RSI shows that GOLD has a negative bias. As a result; the bearish bias in the precious metal is still strong below 1,794, and vice versa; Best wishes!