- XAU/USD extends the previous session’s gains on Monday near $1,800.
- Gold posts the gains for the fifth straight session.
- Lower US Treasury yields undermine the demand for the US dollar.
Update: Gold held on to its modest intraday gains through the early European session, albeit lacked any follow-through and remained capped near the $1,800 round figure. The uptick was sponsored by a softer tone surrounding the US dollar, which tends to benefit the dollar-denominated commodity. That said, a combination of factors held bulls from placing aggressive bets and kept a lid on any further gains for the XAU/USD, at least for the time being.
The Fed Chair Jerome Powell reaffirmed on Friday that the US central bank remains on track to begin tapering its asset purchases soon. This, along with rising bets for an interest rate hike move in 2022, acted as a tailwind for elevated US Treasury bond yields and capped the upside for the non-yielding gold. Apart from this, the dominant risk-on mood in the markets was seen as another factor that could undermine the safe-haven precious metal.
From a technical perspective, acceptance above the 100/200-day SMAs confluence favours bullish traders and supports prospects for additional gains. That said, Friday's intraday pullback from six-week tops warrants some caution for bullish traders. This further makes it prudent to wait for a strong follow-through selling before positioning for any further appreciating move amid absent relevant market-moving economic releases on the first day of the week.
Previous update: Gold trades with gains on Monday, extending the previous week’s upside momentum. The US benchmark 10-year Treasury yields trade below 1.65%, with 0.78% losses, enhancing non-yielding bullion’s appeal.
The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, books fresh losses below 93.50 with 0.15% losses, making gold attractive for the other currencies holders. The greenback weighed down as investors digested the relative pace of interest rate hikes expectations from the major central banks.
The global stock market remained edgy amidst a deterioration in the investor risk sentiment linked to comments made by Fed’s Chairman Jerome Powell. He reiterated his outlook that the US central bank is on confirmed track to reduce its monthly asset purchase before the end of the year. Further, he added that the monthly purchases are expected to end by mid-2022.
The precious metal rallied to its highest level since early September above $1,800 on Friday before trimming gains, following Fed’s chairman Powell’s statement on the timing of interest rates hike, especially given the current labor market conditions. US Treasury Secretary Janet Yellen remained on the same line on inflation, as she said the US is in control of inflation, and it could return to normal by the second half of next year.
As per the US Commodity Futures Trading Commission's data released on Friday, traders cut their net long positions in gold in the week to October,19.
XAU/USD daily chart
On the daily chart, XAU/USD rose for fifth consecutive session after forming a Doji candlestick on October,18. The prices crossed above the 200-day Simple Moving Average (SMA) at $1,793.43 for the first time since early September. The prices moved in the upward channel from the lows of $1,722.31 made on September 30, indicating the current underlying bullish current.
The Moving Average Convergence Divergence (MACD) holds above the midline with a bullish crossover. Any uptick in the MACD indicator would amplify the buying pressure and the prices would approach the $1,810 horizontal resistance level . A daily close above the mentioned level would encourage bulls to retest the high made on September, 7 at $1,827.32. XAU/USD bulls could meet the upper trendline of the upward channel at $1,840 as the next upside target.
Alternatively, if the prices break below the 200-day SMA, it could retrace back to the $1,780 horizontal support level. Furthermore, a successful break of the bullish sloping line could mean more downside for gold toward the $1,765 horizontal support level, followed by the October, 12 low at $1,750.81.
XAU/USD additional levels
|Today last price||1799|
|Today Daily Change||6.41|
|Today Daily Change %||0.36|
|Today daily open||1792.59|
|Previous Daily High||1813.82|
|Previous Daily Low||1782.76|
|Previous Weekly High||1813.82|
|Previous Weekly Low||1760.37|
|Previous Monthly High||1834.02|
|Previous Monthly Low||1721.71|
|Daily Fibonacci 38.2%||1801.96|
|Daily Fibonacci 61.8%||1794.62|
|Daily Pivot Point S1||1778.96|
|Daily Pivot Point S2||1765.33|
|Daily Pivot Point S3||1747.9|
|Daily Pivot Point R1||1810.02|
|Daily Pivot Point R2||1827.45|
|Daily Pivot Point R3||1841.08|
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.