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.

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

 

 

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