- Gold price rebounds amid stabilizing Treasury yields, risk-off mood.
- US dollar holds near yearly highs, as all eyes shift towards Wednesday’s inflation.
- Gold price needs a daily closing above 21-DMA to negate the bearish bias.
After Friday’s wild swings, gold price ended Monday with modest losses, sticking to a tight range between $1761-$1750, as the US money markets remained closed due to the Columbus Day holiday. However, gold sellers returned amid resurgent safe-haven demand for the US dollar. Surging energy prices, with oil prices clinching seven-year highs, stoked up concerns over rising inflation and its risks on the global economic recovery. Further, gold price continued to suffer from the persistent expectations of the Fed’s tapering as early as November, with a probable rate hike in early 2022. The Fed sentiment combined with the US dollar price action dominated on Monday, as gold price kicked off the week on the wrong footing.
On Tuesday, gold price has staged a decent comeback, once again defending the $1750 support area, as the US Treasury yields pause their recent upsurge amid rising stagflation worries and China Evergrande fears. The US dollar has also somewhat eased, aiding gold’s upswing. However, with the Fed’s tapering bets alive and kicking, gold’s bullish potential is likely to remain limited. Further, gold traders will refrain from creating any fresh directional positions ahead of Wednesday’s critical US inflation data and the FOMC minutes. In the session ahead, the broader market sentiment, dynamics in the yields and energy prices will remain in focus for fresh trading impetus in gold price.
Gold Price Chart - Technical outlook
Gold: Daily chart
Gold’s daily chart shows that the price failed to find acceptance above the short-term critical resistance of the 21-Daily Moving Average (DMA), now at $1760, since mid-September.
Therefore, it is critical for gold bulls to yield a daily closing above the latter to negate the near-term bearish momentum.
The downward-sloping 50-DMA at $1777 will get tested on a sustained move above the latter. The $1800 round number will be next on the buyers’ radars. At the level, the 200-DMA aligns.
However, the 14-day Relative Strength Index (RSI) trades flatlined but below the midline, suggesting the downside bias remains intact for now.
On the downside, the $1750-$1745 demand area needs to be taken out convincingly to bring the multi-week troughs of $1722 back into play.
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.