XAU/USD defends biggest jump in 14 weeks near $1,750

  • Gold extends Wednesday’s rebound with a slower pace.
  • DXY ignores firmer Treasury yields, tapering concerns as US CPI confirms “transitory” outlook.
  • Vaccine/virus updates, US PPI eyed for fresh impulse, bulls stay hopeful.
  • Gold Weekly Forecast: Eyes $1,750 on NFP-inspired USD strength

Gold (XAU/USD) struggles to extend the previous day’s recovery moves, the biggest run-up since early May, taking rounds to $1,750 ahead of Thursday’s European session. Gold prices seesaw in a choppy range as bulls seek fresh clues to copy the previous day’s heavy rise.

Also challenging the metal’s rise could be the latest chatters surrounding Fed tapering and rate hikes. Recently, Federal Reserve Bank of San Francisco President Mary C. Daly said, per the Financial Times, “Tapering of asset purchases could start as soon as this year.”

Kansas City Fed President Esther George teased early tapering the previous day while also citing a long way for the monetary policy adjustments. On the same line were Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin.

Additionally, a battle between the covid woes and the vaccine drive also confuses gold traders. While the virus infections are recently on the rise, the NBC news said that the US Food & Drug Administration (FDA) braces for the third vaccine dose for immunocompromised people.

It should be noted that the US Dollar Index (DXY) remains on the back foot after easing from the highest since April on Wednesday, down 0.02% intraday near 92.88. The greenback’s sluggish moves could be linked to the subdued S&P 500 Futures but not the US 10-year Treasury yields that stay firmer to regain 1.35% level by the press time.

Looking forward, gold traders will look for more optimism and further USD weakness to keep the recovery moves on the table. Also important will be the US Producer Price Index (PPI) data for July, market consensus backs no change in 5.6% YoY figures, as well as the weekly readings of the US Jobless Claims, likely to ease from 385K to 375K.

Technical analysis

Gold trades above 5-DMA for the first time in August, backed by RSI recovery from the oversold region, which in turn suggests further recovery towards a six-month-old horizontal hurdle surrounding $1,760.

However, any further upside may linger as MACD flashes bearish signals and hence need a strong push to the north.

Meanwhile, a downside break of $1,745, comprising the stated DMA, will find multiple supports near $1,720 and the $1,700 round figure.

In a case where gold bears remain dominant past $1,700, an ascending trend line from early March and the yearly bottom, respectively around $1,688 and $1,676, will be in focus.

Gold: Daily chart

Trend: Further recovery expected


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