Gold Price Forecast: XAU/USD retreats below $1,750 amid US debt ceiling anxiety


  • Gold keeps bounce off bi-annual horizontal support amid cautious optimism.
  • US Treasury yields step back from three-month top, DXY eases from yearly high to snap four-day uptrend.
  • China factory activity contracts for the first time since February 2020, Evergrande, US debt ceiling also in focus.
  • Dovish to hawkish Fed: Sounds bearish for gold

Update: Gold (XAU/USD) pares intraday gains, the first in a week, around $1,730 heading into Thursday’s European session. In doing so, the yellow metal fades bounce off a seven-week low as traders remain cautious over the key challenges to sentiment despite initially cheering the intermediate solution.

The yellow metal previously cheered the US policymakers’ ability to avoid the government shutdown, as well as news 74% efficacy of Pfizer’s covid vaccine. However, the major obstacles for the US Democrats, over the debt ceiling and stimulus package, remain unsolved as the deadline approaches.

Additionally, news of Evergrande’s missing coupon payment and fears over China’s economic recovery offer extra challenges to the gold buyers.

Though, easy Treasury yields and the US Dollar Index (DXY) pullback keep buyers hopeful ahead of crucial US Senate session. Also important will be the final readings of US Q2 GDP and updates concerning Evergrande, as well as China.

End of update.

 

Gold (XAU/USD) consolidates the monthly losses, the heaviest since June, picking up bids to refresh intraday high near $1,730 during early Thursday. In doing so, the yellow metal tracks the US Treasury yields’ pullback to bounce off the short-term key support area.

The US 10-year Treasury yields drop 3.0 basis points (bps) to 1.51%, extending pullback from a six-month high flashed the previous day as traders shift their attention from the Fed tapering concerns to US stimulus and debt ceiling headlines.

US House Speaker Nancy Pelosi is hopeful of a solution and President Joe Biden also turned down his official travel plans to solve the critical issue on hand, which in turn favor investors expecting the diplomats to avoid closure of the US government offices on October 01. Also, the News of AstraZeneca’s covid vaccine showing 74% efficacy in the large US trial seems to have underpinned the latest hopes of overcoming the Delta covid crisis and underpins the S&P 500 Futures to print mild gains by the press time.

However, China’s first factory activity contraction since February 2020 and a second coupon payment default by Evergrande joins Fed Chairman Jerome Powell’s firm support to the tapering to challenge the mood, as well as the gold prices.

That said, the US Dollar Index (DXY) eases from the yearly high around 94.30, snapping a four-day uptrend.

Moving on, headlines concerning China and Evergrande, not to forget Fedspeak and second-tier data from the US may entertain gold traders. However, major attention will be given to the news from the US Senate over the infrastructure spending bill and debt ceiling extension. Should the policymakers manage to tackle the problem, gold may extend recovery moves.

Technical analysis

Nearly oversold RSI triggered the gold price rebound from early August levels, also comprising six-month-old horizontal support. However, bearish MACD challenges the recovery moves below the weekly resistance line.

Hence, the commodity is likely to remain on the consolidation mode between $1,721 and $1,738 levels with more support to the bears than otherwise.

Should the quote drops below the key horizontal support near $1,721, its slump to $1,700 and the recent low near $1,687 can’t be ruled out.

On the contrary, an upside break of $1,738 will have to cross a seven-week-old horizontal hurdle around $1,745 before targeting the descending resistance line from September 03 near $1,765.

Gold: Daily chart

Trend: Bearish

Additional important levels

Overview
Today last price 1729.67
Today Daily Change 3.35
Today Daily Change % 0.19%
Today daily open 1726.32
 
Trends
Daily SMA20 1776.92
Daily SMA50 1786.2
Daily SMA100 1811.11
Daily SMA200 1803.48
 
Levels
Previous Daily High 1745.56
Previous Daily Low 1721.71
Previous Weekly High 1787.35
Previous Weekly Low 1737.83
Previous Monthly High 1831.81
Previous Monthly Low 1687.78
Daily Fibonacci 38.2% 1730.82
Daily Fibonacci 61.8% 1736.45
Daily Pivot Point S1 1716.83
Daily Pivot Point S2 1707.35
Daily Pivot Point S3 1692.98
Daily Pivot Point R1 1740.68
Daily Pivot Point R2 1755.05
Daily Pivot Point R3 1764.53

 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD: Bears stepping in as US yields melt

EUR/USD is slightly firmer on the day trading around the 1.16 figure after rising from a low of 1.1548 to a score a high of 1.1626 following a drop in US yields. The 10-year yield is testing the horizontal support and has broken below the trendline.

EUR/USD News

GBP/USD: Sellers attack 50-DMA on monthly support break

GBP/USD prints a three-day downtrend following the key support break, pressured around 1.3740 during the early Asian session on Thursday. The cable pair broke an ascending support line, now resistance, from September 30 the previous day but refrained from closing below 50-DMA.

GBP/USD News

Gold remains pressured near $1,800 amid USD recovery

Gold prices surrender the previous session's gains and struggle to defend the $1,800 mark. The US 10-year Treasury yields rebound from the early lower levels to trade at 1.55%, following the upcoming BOJ and the ECB policy meetings on the day.

Gold News

MATIC outperforms Bitcoin and Ethereum, Polygon targets $3 and new all-time highs

MATIC price action has been in a bullish tear, trading to the inverse of nearly every other cryptocurrency. Consequently, it was positioned perfectly for a rally and is now on track to create a new all-time highest weekly close. A new all-time highest weekly close is on the horizon.

Read more

BOJ Preview: Focus on outlook tweaks ahead of general election Premium

Despite the recent depreciation in the yen and rising energy prices, the Bank of Japan (BOJ) is likely to maintain its monetary policy settings on Thursday, as it concludes its two-day monetary policy review meeting.

Read more

Forex MAJORS

Cryptocurrencies

Signatures