• Gold price keeps the red, as Treasury yields drive the US dollar higher ahead of ADP.
  • Surging energy cost, Fed’s tapering calls and China worries weigh on risk appetite.
  • Gold price needs acceptance below $1748 to seek additional downside.

Gold price retreated sharply from eight-day highs of $1771 and tested the recent range lows just below $1750 on Tuesday, before recovering to settle the day at $1760. The downside opened up in gold price, as the US dollar firmed amid the buying resurgence in the Treasury yields and the risk-off market profile.

Surging energy costs and US political infighting on the debt ceiling were the key reasons behind the reduced appetite for riskier assets, which boosted the US dollar’s safe-haven appeal. On the other side, rising inflation led by firmer commodity prices posed a threat to the economic recovery while advocating sooner than expected Fed’s monetary policy normalization. Growing Fed’s tapering bets drove Treasury yields higher, in turn, supporting the buck at gold’s expense. Gold is a non-interest-bearing investment asset.

Wednesday’s trading so far is no different for gold price, as bears remain in control, extending the previous declines amid the downbeat market mood. The US dollar looks to extend the renewed upside while Treasury yields keep pushing higher, weighing negatively on the yieldless gold price. Markets also turn cautious ahead of the US ADP Employment Change numbers, especially after stronger US ISM Services PMI, as it could seal in Fed’s tapering as early as next month. The US private sector is likely to have added 428K jobs in September vs. 374K previous. This indicator is widely watched, as it is a precursor to the all-important US NFP numbers.

However, US-China trade jitters, China Evergrande’s debt crisis and a stalemate over the American debt ceiling could keep the overall market sentiment undermined, which may put a floor under gold price, in the wake of a flight to safety.

Gold Price Chart - Technical outlook

Gold: Daily chart

Gold’s daily chart shows that gold price broke out of the month-long falling wedge on Friday, although the bulls failed to extend the upside.

The bearish 21-Daily Moving Average (DMA), now at 1.1767 continues to remain a tough nut to crack for gold buyers.

The Relative Strength Index (RSI) is pointing lower while below the midline, backing the case for additional downside.

The September 27 highs of $1745 remain on the sellers’ radars if the recent range lows near the $1749 region is cleared on a sustained basis. Further south, the seven-week lows at $1722 could be back in play.

 Only a daily closing above the short-term critical 21-DMA could revive the recent recovery momentum, opening gates towards the downward-sloping 50-DMA at $1782. Gold bulls will then target the $1800 psychological magnate.

 

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD retreats toward 1.0550 as dollar rebounds

EUR/USD retreats toward 1.0550 as dollar rebounds

EUR/USD has lost its traction in the American session and retreated to the 1.0550 area. In the absence of high-tier macroeconomic data releases, the dollar is staging a rebound with the US Dollar Index rising above 103.00 and forcing the pair to edge lower.

EUR/USD News

GBP/USD consolidates its weekly gains below 1.2500

GBP/USD consolidates its weekly gains below 1.2500

GBP/USD has extended its sideways grind below 1.2500 into the second half of the day on Friday with the dollar staying resilient against its rivals. Nevertheless, the pair remains on track to snap a four-week losing streak.

GBP/USD News

Gold loses traction, drops below $1,840

Gold loses traction, drops below $1,840

Gold came under modest bearish pressure in the American session on Friday and dropped below $1,840. The benchmark 10-year US Treasury bond yield stays quiet above 2.8%, helping XAU/USD limit its losses ahead of the weekend.

Gold News

Bitcoin price will bounce to $36,000, but what happens next will leave you shocked

Bitcoin price will bounce to $36,000, but what happens next will leave you shocked

A brief technical and on-chain analysis on Bitcoin price. Here, analysts evaluate where BTC could be heading next. Does the possibility for a cat bounce make sense?

Read more

PANW shows bullish reversal chart pattern after earnings beat

PANW shows bullish reversal chart pattern after earnings beat

PANW stock benefits from continued strong revenue growth. Palo Alto Networks now nearly services half of the Global 2000. PANW stock is showing a bullish reversal pattern on its daily chart.

Read more

Majors

Cryptocurrencies

Signatures