- Gold bulls attempt a bounce but not out of the woods yet.
- COVID-19 fears, US election anxiety to keep the US dollar in favor.
- September low of $1849 is in sight along with US macro data.
Following a close below the 100-day moving average (DMA), Gold (XAU/USD) extended its declines into the second straight day on Thursday. The bright metal fell to fresh monthly lows of $1860 before recovering some ground to settle the day near $1868. “Sell everything mode” returned to markets in the first half of the day, as the coronavirus fears dominated and bolstered the haven demand for the US dollar across the board. However, the risk sentiment stabilized in the American session after the US GDP data showed a sharp recovery in the third quarter and helped Wall Street rebound. The greenback continued to draw bids and reached monthly highs above 94.00 vs, its main competitors, underpinned by the US fiscal stimulus impasse, election anxiety and dovish ECB.
So far this Friday’s trading, gold is attempting a tepid bounce, as the US dollar bulls take a breather after the solid upsurge. The market mood remains sour amid risk-off action in the Asian stocks and US equity futures, in light of a mixed bag of earnings reports from top-tier US tech companies failed to impress the investors. With the US reporting record 91K new virus infections and tighter restrictions in the EU, the risk-off flows could intensify going forward and revive the haven bids for the greenback. Therefore, the risks remain skewed to the downside for gold, as the metal is on track for the worst week in over a month.
Gold: Short-tern technical outlook
Daily chart
Gold gave a daily closing below the critical 100-DMA, now at $1890, for the second day in a row, convincing investors that the path of least resistance is to the downside.
The 14-day Relative Strength Index (RSI) sees an upturn but remains below the midline, within the bearish region, adding credence to the bearish outlook.
Therefore, the next stop for the bears is seen at $1849, the September month low. Acceptance below the latter could trigger a fresh sell-off towards the horizontal trendline (orange) support at $1791.
Alternatively, recapturing the 100-DMA barrier on a daily closing basis is critical to easing off the selling pressure in the near-term.
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.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.