Gold (XAU / USD) takes offers around $ 1,792.50, extending yesterday’s losses ahead of Thursday’s European session.
The yellow metal did not benefit from the weakness of the US dollar on Wednesday as market sentiment weakens on the Fed’s next moves even as the US Consumer Price Index (CPI) favored stocks and weighed on US Treasury yields.
The reason could be related to cautious optimism displayed by policymakers at the European Central Bank (ECB) and strong NY Empire State Manufacturing, as well as import-export price index data for September. and August respectively.
Among the ECB’s policymakers, Isabel Schnabel, member of the executive board, was more hawkish, declaring: “The market may be overestimating the risks weighing on the outlook for global growth”. On a related note, ECB chief economist Philip Lane said he was happy that the accommodative monetary policy is helping to bolster core inflation in the eurozone, as Reuters reported. .
It should be noted that Australia’s trilateral security pact with the United Kingdom and the United States, using nuclear-powered submarines, signals a further deterioration in relations with China and weighed on sentiment in the walked earlier in the day. In addition, higher viral infections in Australia, China and New Zealand are also challenging risk appetite, as well as gold prices.
It should be noted that the United States is adding the United Kingdom to its welcome list for next week’s diplomatic talks at the White House and is amplifying market fears that Western friends are once again preparing for a battle with China, which in turn weighs heavily on sentiment.
Amid those games, S&P 500 futures erased early Asian gains as 10-year US Treasury yields fell one basis point (bps) to retest 1.297% at time of release.
Given the bitter market sentiment ahead of key data, risk catalysts could keep gold prices under pressure.
Read: August US Retail Sales Snapshot: Can Gold Turn Bullish On A Weak Impression?
In addition to a pullback from a 17-day horizontal hurdle, gold traders’ failure to maintain the 100-SMA breakout also hints at commodity weakness, further illustrated by an RSI line in downward slope.
Therefore, gold sellers are well oriented towards the monthly support line, near $ 1,785.
However, a clear downside below the indicated support line will set the tone for further southward run to mid-August lows near $ 1,770.
Meanwhile, 100-SMA and the horizontal zone comprising several highs marked since August 24, around $ 1,804 and $ 1,808 -09 respectively, are preserving the metal’s near-term rise.
Main resistance is also a two month old area near $ 1,834 which holds the key to gold rising towards the $ 1,900 level.
Overall, gold prices remain low-key between short-term horizontal resistance and an upward support line.
Gold: four hour graph
Trend: new weakness expected