Gold Price Forecast: XAU/USD, hit by risk appetite, finds support below $1,770
- Gold, rejected at $1,800, retreats to levels below $1,770.
- Risk appetite and higher US bonds have hit gold futures.
- XAU/USD's bearish momentum might increase below $1,745.
Gold futures have dropped sharply on Friday, hurt by a combination of factors that have boosted appetite for risk. The yellow metal has depreciated more than $30 after having topped at $1,800 on Thursday, to find supporet right below $1,770 during the afternoon US trading session.
Upbeat data and a rebound of US yields have weighed on gold
Bullion has given away Thursday’s gains with a risk rally and the recovery of US T-Bond yields denting the appeal of the safe-haven metal. The upbeat quarterly results at major banks with Goldman Sachs reporting a 66% increase on earnings in the third quarter to conclude a string of better than expected results this week have boosted investors’ optimism, offsetting fears about inflationary pressures and supply chain disruptions.
On the other hand, long-term US T-Bond yields have bounced up, with the 10-year bond, which had dropped from the 1.61% top hit on Monday to a 1.51% low on Thursday, has picked up to 1.55% on Friday, curbing attractive for gold, further.
The macroeconomic calendar has not been of any particular help for the safe-haven gold, either. The US retail sales have increased by 0.7% in September, according to data released by the Commerce Department on Friday, beating market expectations of a 0.4% increment, although partially due to higher prices, namely in auto dealers who are struggling with a global shortage of computer chips.
XAU/USD: Breach of 1.745 support might accelerate the decline
From a technical perspective, XAU/USD seems to have found buyers at $1.770 area to take a breather after a 1.8% reversal. Below here, the next potential support area lies at $1,745 (October 6 low) which would open the path towards a key support area at $1,725 (September 29, 30 low).
On the upside, resistance levels remain at $1,807 (Sept. 15 high) ahead of $1.830, July and September’s peak. If that level is surpassed, the next potential target might be June 8 and 11 highs at $1,905.
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
