XAU/USD Current price: $1,762.97
- Market participants rushed into the dollar amid concerns about global growth.
- Gold prices recovered from a fresh September low, but bears retain control.
- XAU/USD could shrug off the bearish stance in the near term once above 1,769.10.
Spot gold fell to a fresh monthly low of $1,742.00 a troy ounce at the weekly opening, as risk aversion took over financial markets. Worldwide stocks plunged amid renewed concerns about global economic growth. The Evergrande financial crisis, a Chinese property giant, highlighted the fragility of the ongoing economic recovery as the pandemic continues. The company’s debt jeopardises Chinese financial stability moreover if it finally falls into default.
Market participants rushed into the dollar, which pushed gold to the mentioned daily low. And while the greenback retained its strength throughout the day, the bright metal managed to turn positive, currently trading around $1,762.00 a troy ounce.
This week's focus is on the US Federal Reserve monetary policy meeting to take place on Wednesday, September 22. The US central bank is expected to hold its fire this time, although speculative interest hopes for fresh clues on tapering, despite a tighter monetary policy seems unlikely before year-end.
Gold price short-term technical outlook
From a technical point of view, XAU/USD remains on the losing side. The daily chart shows that it is developing below the 61.8% retracement of its March/June advance at 1,769.10, the immediate resistance level. Furthermore, the same chart shows that it remains below all of its moving averages, with the shorter one gaining bearish traction below the longer ones. In the meantime, technical indicators hold stable within negative levels.
In the 4-hour chart, the bright metal met sellers around a firmly bearish 20 SMA, which keeps heading south below the longer ones. Technical indicators bounced from intraday lows but remain within negative levels, reflecting the intraday recovery rather than suggesting an upcoming advance.
Support levels: 1,754.20 1,742.00 1,728.50
Resistance levels: 1,769.10 1,785.40 1,796.90
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