Update: Gold (XAU/USD) fades bounce off intraday low, down 0.52% on a day around $1,778, as European traders brace for Thursday’s bell.
The yellow metal prints the biggest daily losses since the August 09 slump as the market sentiment sours amid coronavirus fears. Also favoring the gold sellers could be the Fed tapering woes and chatters over growth figures, raised by global banks and rating agencies, as Delta covid strain firm-up the grips.
Additionally weighing on the commodity are the US dollar gains. That said, the US Dollar Index (DXY) jumps to the nine-month high as the market’s risk-off mood joins a technical breakout.
Looking forward, gold traders need to keep their eyes on the virus updates and GDP, as well as tapering, related headlines for fresh impulse. Also important are the US Jobless Claims for the week ended on August 13, expected 363K versus 375K and the Philadelphia Fed Manufacturing Survey for August, forecast 23 versus 21.9 prior.
Gold price is pressurizing lows near $1780, looking for a sustained break below the round number to extend the downside towards the $1750 support area. The bearish sentiment grips gold price, as the US dollar holds the higher ground amid a double booster shot.
The July Fed meeting minutes showed that the officials discussed tapering plans before the end of this year, which gave a shot in the arm for the dollar optimists.
Meanwhile, growing fears over the Delta covid variant spread weighs on the market mood, bolstering the safe-haven demand for the greenback.
Looking ahead, amid a lack of relevant US economic news, the covid updates and the dynamics in the dollar will continue to have a significant impact on gold price. Hawkish Fed expectations will likely keep gold bulls on the defensive.
However, the risk-off trading in the global stocks combined with weaker Treasury could likely offer some reprieve to gold bulls.
Gold Price Chart: Daily
Looking at gold’s daily chart, the price turned south after having failed to find acceptance above the critical short-term resistance at 21-Daily Moving Average (DMA) of $1788.
The bears now look to take out Wednesday’s low of $1777 to flex their muscles towards the August 16 low of $1770.
Further south, the $1750 psychological support could come into play should the downside accentuate.
The 14-day Relative Strength Index (RSI) has changed its course and re-entered the bearish territory, backing a potential move lower.
On the upside, daily closing above the 21-DMA is critical to reviving gold’s recovery momentum from five-month troughs.
The bulls will then battle the bearish 50-DMA at $1795. However, only a sustained break above the $1800 mark could negate the near-term downside bias.
The level to beat for gold bulls is at the 100-DMA resistance line of $1808.
Gold Price: Additional levels to watch