Gold on the defensive, below $1870 level amid stronger USD

Gold struggled to capitalize on the previous day’s modest bounce from two-month lows.
The prevalent USD buying interest capped the upside for the dollar-denominated commodity.
A turnaround in the equity markets, sliding US bond yields might help limit deeper losses.

Haresh Menghani FXStreet

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses, around the $1865-70 region through the early European session.

The XAU/USD failed to capitalize on the previous day's modest rebound from two-month lows and witnessed a subdued/range-bounce price action on the last trading day of the week. Investors remain concerned that the second wave of coronavirus infections could threaten the economic recovery, which, in turn, continued benefitting the US dollar's status as the global reserve currency. A stronger greenback kept a lid on any meaningful upside for the dollar-denominated commodity.

Meanwhile, reports indicated that Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus package boosted investors' confidence. The optimism, however, faded rather quickly and the same was evident from a turnaround in the equity markets, which tends to underpin the safe-haven gold. This, along with a fresh leg down in the US Treasury bond yields, might further contribute to limit any deeper losses for the non-yielding yellow metal, at least for now.

From a technical perspective, gold on Thursday managed to rebound from the vicinity of the 100-day SMA support. This makes it prudent to wait for a sustained break below the mentioned support before positioning for an extension of this week's steep decline. Nevertheless, the commodity remains on track to end the week with heavy losses and record the lowest weekly close since July.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders. The data might influence the USD price dynamics, which along with the broader market risk sentiment might assist traders to grab some short-term opportunities.

Technical levels to watch

XAU/USD

Overview
Today last price	1866.36
Today Daily Change	-1.34
Today Daily Change %	-0.07
Today daily open	1867.7

Trends
Daily SMA20	1935.48
Daily SMA50	1941.54
Daily SMA100	1843.82
Daily SMA200	1722.91

Levels
Previous Daily High	1877.12
Previous Daily Low	1848.84
Previous Weekly High	1973.64
Previous Weekly Low	1932.88
Previous Monthly High	2075.32
Previous Monthly Low	1863.24
Daily Fibonacci 38.2%	1866.32
Daily Fibonacci 61.8%	1859.64
Daily Pivot Point S1	1851.99
Daily Pivot Point S2	1836.27
Daily Pivot Point S3	1823.71
Daily Pivot Point R1	1880.27
Daily Pivot Point R2	1892.83
Daily Pivot Point R3	1908.55

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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