XAU/USD Current price: $1,793.00
- Wall Street posted record highs before retreating, underpinned by solid earnings reports.
- US Treasury yields eased toward the lower end of their weekly range.
- XAU/USD has lost its bullish potential, but a steeper decline is not yet confirmed.
Gold edged lower on Wednesday, trading as low as $1,782.31 a troy ounce. The greenback strengthened ever since the day started against its commodity-rival, getting a boost early in the American session from upbeat US data and rallying equities.
Wall Street opened with gains, reaching record levels ahead of the opening, underpinned by solid earnings reports, with the DJIA and the S&P 500 reaching all-time highs and the Nasdaq Composite flirting with its record value. However, equities lost momentum afterwards, and major indexes are currently trading mixed around their opening levels.
The US Richmond Fed Manufacturing Index improved to 12 in October, much better than the previous -3 or the expected 3. New Home Sales increased by 14% MoM in September, while CB Consumer Confidence unexpectedly bounced in October, printing at 113.8 from an upwardly revised 109.8. According to the official report, “the proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021.”
Meanwhile, US government bond yields retreated to the lower end of their weekly range, with the benchmark on the 10-year Treasury note currently at around 1.62%. Gold managed to recover from the mentioned daily low but remains below the critical 1,800 threshold.
Gold price short-term technical outlook
XAU/USD is trading at around $1,793 a troy ounce, a handful of cents above the 23.6% retracement of its latest bullish run. The daily chart shows that the price is also converging with a bearish 100 SMA and a directionless 200 SMA, which reinforce the actual support area. Technical indicators, in the meantime, turned lower but hold within positive levels, as the 20 SMA maintains its bullish slope well below the current level, all of which limits the bearish potential.
In the near term, and according to the 4-hour chart, the risk is skewed to the downside, although the pair needs to confirm a new leg south. The bright metal has broken below a now directionless 20 SMA, while technical indicators retreated from near overbought readings to their midlines, where they are now consolidating. The next Fibonacci support level comes at 1,778.60, the level to break to confirm a steeper decline.
Support levels: 1,790.60 1,778.60 1,767.50
Resistance levels: 1,813.80 1,823.15 1,833.95
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.