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