- Gold price is testing the downside, with more losses in the offing.
- US dollar holds firmer on the session amid return of risk-off mood.
- Bears likely to remain in control, as the daily chart suggests.
Gold price once again witnessed good two-way businesses on Tuesday, initially rallying as high as $1825 before reversing sharply to settle around $1810. The 10-year US Treasury slid to the lowest levels in five-month lows on global economic growth concerns, in light of the rapid spread of the Delta covid variant. In early American trading, gold price saw a sharp downtick after facing rejection at the critical 200-Daily Moving Average (DMA) at $1825. The rebound in the US yields drove the greenback higher amid stimulus optimism while the risk sentiment improved on Wall Street after the world’s richest man, Jeff Bezos successfully completed a short trip to space. However, the retreat in the dollar amid risk-on flows helped gold price recover ground towards the closing.
Heading into the Senate Democrats’ vote on the US infrastructure package, the US dollar has caught a fresh bid wave while markets have turned nervous once again, as concerns over the Delta covid strain continue to lurk. Gold price, therefore, remains on the back foot towards $1800. Although the losses remain capped by a retreat in the US rates amid a cautious mood. Going ahead, gold price remains exposed to downside risks, as covid concerns and US-China tensions loom in the background, boding well for the safe-haven dollar. The broader market sentiment will be closely followed amid a data-scarce US docket and ahead of President Joe Biden’s infrastructure bill vote.
Gold Price Chart - Technical outlook
Gold: Daily chart
Technically, gold bears remain on track to test the $1800 mark following its rejection at the 200-DMA.
A sustained break below the latter could trigger a fresh decline towards the critical demand zone around $1795, where the 21-DMA and 100-DMA meet.
The 14-day Relative Strength Index (RSI) has pierced through the midline and entered the bearish zone, supporting the case for further downside.
The next relevant support awaits at the July 12 low of $1792.
On the flip side, the 200-DMA will be the level to beat for the bulls. Ahead of that the July 19 high of $1817 could be retested.
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