Gold pulls back from 50-day EMA as risk-tone resettles

Following its pullback from early-August lows, Gold prices fail to remain strong as buyers await fresh signals of recent risk aversion. In doing so, the yellow metal presently declines to $1,476.16 ahead of the European open on Wednesday.

The yellow metal bounced off $1,455 on Tuesday as fears of global slowdown unearthed on the back of disappointing activity numbers from the key global economies.

As a result, Wall Street closed in a sea of red while the Asian stocks follow the suit. However, a lack of catalysts during Asian session, coupled with Chinese traders’ absence, kept a lid on the safe-haven buyers.

Also portraying the risk reset is the US 10-year Treasury yields that recover nearly two basis points (bps) to 1.663% after diving more than three bps the other day. Furthermore, investors were also taken aback by Iran’s readiness to have unconditional talks with Saudi Arabia, as noted by the Aljazeera.

While the absence of major data/events is likely to offer a dull trading day, traders will seek confirmation of recent risk-off from the speech of the Federal Reserve Bank of New York President John Williams and early indication of Friday’s Nonfarm Payrolls, i.e. the US ADP Employment Change.

Technical Analysis

FXStreet Analyst Ross J Burland portrays the bullion’s recent decline as lacking to break the key Fibonacci retracement level:

"Gold has completed a 50% mean reversion of the late June swing lows to recent highs around 1470 and slipped to close proximity of the 61.8% Fibonacci target. However, as fragile risk-appetite is as we move into the final quarter of the year, expectations of a worsening economic backdrop, the safe-haven metal attracted a bid just ahead of key support marked by the convergence of a Fibo target and the July highs/resistance guarding a full 100% retracement to 1380. On the upside, bulls will need to get back above the 1500 psychological level and then the 1535 resistance comes in again ahead of the 1550 target which guards territories towards 1590 as the 127.2% Fibo target."