- Gold’s upside attempts likely capped after China’s GDP miss.
- US dollar demand returns starting out a fresh week.
- Focus on US fiscal stimulus news, election debate and PMIs.
Gold (XAU/USD) booked a loss for the first time in three weeks, although managed to settled past week just above the $1900 mark. The yellow metal failed to sustain at higher levels above $1910 on several occasions as the US dollar gained its feet across the board on fading hopes of a US fiscal stimulus deal. No progress on the coronavirus relief package ahead of the Nov 3. US elections combined with surging Eurozone virus cases and no-deal Brexit fears spooked markets and boosted the haven demand for the greenback.
Heading into a new week, gold looks to extend its month-long range play between $1850-$1950, as the broader market sentiment and the dollar dynamics will continue to play out. So far this Monday, sellers continue to lurk above $1900, especially after the Chinese Q3 GDP miss disappointed market and put a fresh bid under the dollar. China’s annualized Q3 GDP arrived at 4.9% vs. +5.2 expectations and +3.2% last. The downbeat data negated the optimism over a new US fiscal relief aid and virus vaccines.
Meanwhile, in evidence of reduced confidence in the bright metal, speculative interest and holdings in SPDR Gold Trust decreased in the week to Oct 13.
Gold: Short-tern technical outlook
Daily chart
Gold’s daily chart suggests that the range play around the $1900 level will likely extend until the spot yields a break out in either direction.
To the topside, the confluence zone of the falling trendline resistance and bearish 50-daily moving average (DMA) around $1915-20 remains a tough nut to crack for the XAU bulls.
On the other hand, the critical 100-DMA support at $1873 needs to be cleared to unleash further declines.
At the moment, the price is holding onto the 21-DMA at $1895, with the 14-day Relative Strength Index (RSI) turning flat while within the bearish region.
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