Gold sell-off pauses as US dollar retreats from two-month high

Dollar's retreat from two-month highs puts brakes on gold sell-off.
Gold's daily chart shows the market has turned indecisive.
Risks, however, remain skewed in favor of deeper losses.

Omkar Godbole FXStreet Contributor

Gold bears are taking a hiatus amid the US dollar's pullback from two-month highs.

Indecisive market

The yellow metal witnessed two-way business and closed on a flat note on Thursday, forming a Doji candle – an indecision sign.

The selling ran out of steam at $1,848 as the uptrend in the dollar index (DXY) paused at 94.59, the highest level since July 24. The DXY closed Thursday at 94.33 and remains sidelined near that level at press time.

Meanwhile, gold is currently trading near $1,863 per ounce, having ended Thursday at $1,867.

Downside risks persist

While the dollar index has pulled back from multi-week highs in the last 12 hours or so, the upside breakout from the two-month trading range of 92.00-94.00 confirmed earlier this week is still valid.

Besides, disappointment that Federal Reserve's recent decision to adopt average inflation targeting did not translate into more stimulus, renewed coronavirus fears, and growth concerns could continue to push the dollar higher in the run-up to the US elections.

As such, the path of least resistance for gold appears to be on the downside.

Technical levels

XAU/USD

Overview
Today last price	1863.72
Today Daily Change	-3.98
Today Daily Change %	-0.21
Today daily open	1867.7

Trends
Daily SMA20	1935.48
Daily SMA50	1941.54
Daily SMA100	1843.82
Daily SMA200	1722.91

Levels
Previous Daily High	1877.12
Previous Daily Low	1848.84
Previous Weekly High	1973.64
Previous Weekly Low	1932.88
Previous Monthly High	2075.32
Previous Monthly Low	1863.24
Daily Fibonacci 38.2%	1866.32
Daily Fibonacci 61.8%	1859.64
Daily Pivot Point S1	1851.99
Daily Pivot Point S2	1836.27
Daily Pivot Point S3	1823.71
Daily Pivot Point R1	1880.27
Daily Pivot Point R2	1892.83
Daily Pivot Point R3	1908.55

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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