Gold Price Forecast: XAU/USD rebounds towards $1765 key resistance amid worsening mood
|- Gold recovers from immediate range support, pokes intraday high of late.
- US Congress passage of debt filibuster, China’s return favor risk-on mood.
- DXY struggles during the pre-NFP trading lull despite firmer Treasury yields.
- US September Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises
Update: Gold price is bouncing off a brief dip to near $1750, as the bulls regain control amid deteriorating risk sentiment. China’s property sector worries are back and dampening the market mood, prompting safe-haven flows into gold and US bonds. The resultant retreat in the US Treasury yields is aiding the recovery in gold price, as it looks to recapture the bearish 21-Dialy Moving Average (DMA) at $1764.
In early Asia, gold dropped to hit a daily low at $1753 after the risk-on sentiment got a lift from the passage of the legislation on the debt ceiling extension in the US Senate. Looking ahead, all eyes remain on the US NFP report for fresh cues on the Fed’s tapering plans.
Read: NFP Preview: What to expect for USD?
Gold (XAU/USD) consolidates weekly losses while taking the bids to refresh intraday high near $1,758, up 0.10% on a day, during early Friday. Although the brighter market sentiment favors gold buyers, the pre-NFP anxiety keeps the metal inside a short-term trading range.
Risk appetite improves as is the US Congress passes the bill favoring the debt ceiling extension by $408 billion until early December 2021. On the same line were positive headlines concerning the Sino-American relations and the People’s Bank of China’s (PBOC) readiness to keep the financial markets liquid.
On the contrary, the firming of the Fed tapering woes, amid stronger early signals for the US Nonfarm Payrolls (NFP), up for publishing today, keeps the buyers cautious. Forecasts suggest, the headline Nonfarm Payrolls (NFP) to rise by 488K versus 235K prior whereas the Unemployment Rate may ease to 5.1% versus 5.2% previous readouts.
It’s worth noting that the US Dollar Index (DXY) struggle for fresh clues despite the US 10-year Treasury yields gain 1.8 basis points to 1.59% by the press time, after rising to the four-month high the previous day. Further, Wall Street marked another positive day by the end of Thursday and S&P 500 Futures follow suit at the latest.
Moving on, gold prices may witness bumps before the key US jobs report for September but the bulls have a tough road to the north so far. Hence, firmer employment data from the US can increase hardships for gold buyers.
Technical analysis
Gold remains capped between 21-DMA and 10-DMA so far during the week. However, the gradually rising MACD line in favor of the bulls and a sustained run-up beyond the previous support line from early September hints at buyers’ preparations.
For that, a successful break of $1,765, comprising 21-DMA, becomes necessary to welcome the uptrend targeting the September 21 swing high near $1,788. Though, any further advances will be questioned by 200-DMA surrounding the $1,800 threshold.
Meanwhile, gold’s decline below the 10-DMA level of $1,752 needs validation from the resistance-turned-support close to $1,748 to recall the sellers.
During the gold seller’s dominance past $1,748, the last month’s bottom near $1,721 will be in focus.
Gold: Daily chart
Trend: Further recovery expected
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