XAU/USD Current price: $1,784.32
- Inflation-related concerns pushed market participants into the greenback.
- US Business activity recovery was uneven, with persistent labour and material shortages.
- XAU/USD maintains its bearish stance despite being extremely oversold.
Spot gold extended its slide below the 1,800 threshold, trading as low as $1,781.95 so far this Tuesday. The American dollar retained its positive momentum after a brief downward corrective movement during the mid-London session and trades at fresh multi-month highs against most of its major rivals.
The Dollar Index hit its highest in 16-month, while US Treasury yields soared, continuing Monday’s rally triggered by news that US Federal Reserve Chair Jerome Powell was nominated for a second term. Also, inflation-related concerns returned to the spotlight following the release of the EU Markit PMIs. The preliminary estimates for private sector activity in the Union resulted better than anticipated, although the report also noted that the upturn was accompanied by a marked increase in inflationary pressures during the month, with costs and selling prices rising at record rates.
In the US, business activity recovery was uneven, according to Markit, with the softer overall growth led by the services sector. Manufacturers posted a slightly stronger increase in production, although still suffering from labour and material shortages. The US will publish an update on inflation on Wednesday, ahead of the long Thanksgiving weekend.
Gold price short-term technical outlook
XAU/USD has fallen for a third consecutive day, currently trading well below the 61.8% retracement of its November rally, which exposes the base of the range at 1,758.81. The daily chart shows that the bright metal fell below its 100- and 200-SMAs, both converging directionless around 1,792 and providing an immediate resistance. The RSI indicator heads firmly lower within negative levels, while the Momentum has stabilized just above its midline, both hinting at persistent selling interest.
Gold is extremely oversold according to technical indicators on the 4-hour chart, which anyway keep heading firmly lower, as the price pressures its daily low. In this time frame, the metal is developing below all of its moving averages, having broken below the 200-SMA for the first time in three weeks.
Support levels: 1,771.95 1,758.80 1,745.20
Resistance levels: 1,792.00 1,803.1,817.75
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