- Gold price licks its wounds near monthly lows after testing the $1,700 mark.
- US dollar rallies with yields as investors cheer hawkish Fed and ECB rate hike bets.
- XAU/USD could extend losses towards $1,688 on a firm break below $1,700.
Gold price is on a five-day downtrend, eyeing a sustained move below the $1,700 mark amid unrelenting buying interest seen around the US dollar. Markets seem to be convinced about a 75 bps Fed rate hike in September, reflective of the ongoing rally in the US Treasury yields across the curve. The two-year US rates are at their highest level since 2007 while the benchmark 10-year yields are at two-month highs above 3.20%. According to CME FedWatch Tool, there is a 72% probability of an outsized rate hike this month. Further, Eurozone inflation hit another record high at 9.1% in August, cementing a 75 bps Sept ECB rate hike. Expectations of aggressive tightening from the Fed and the ECB offset weak US ADP jobs data, weighing negatively on the non-yielding bullion. The bright metal now looks forward to the US ISM Manufacturing PMI and Nonfarm Payrolls data for fresh trading directives.
Also read: Gold Price Forecast: XAUUSD close to confirming a long-term double top
Gold Price: Key levels to watch
The Technical Confluence Detector shows that the gold price is gathering strength for the next push lower, as bears aim for the pivot point one-day S2 at $1,700.
If sellers find a strong foothold below the latter, a sharp sell-off towards the pivot point one-day S3 at $1,688 will be inevitable.
On the flip side, any recovery attempts will need acceptance above the convergence of the pivot point one-week S2 and the previous low four-hour at $1,707.
The previous day’s low of $1,710 will challenge the road to recovery, above which the Bollinger Band one-day Lower at $1,713 will come into play.
Further up, a dense cluster of resistance levels around $1,716 will be a tough nut to crack for bulls. That price zone is the confluence of the Fibonacci 38.2% one-day and SMA5 four-hour.
Here is how it looks on the tool
About Technical Confluences Detector
The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.
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 holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold clings to strong daily gains above $2,380
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.