Gold Price Forecast: XAU/USD drops towards $1,750 as USD consolidates losses
- Gold snaps four-day uptrend, refreshes intraday low during a pullback from one-week high.
- Virus woes escalate with geopolitical tensions in the Middle East, risk-off underpin greenback’s rebound.
- US Treasury yields remain heavy after declining the most since July 06 the previous day.
- Gold Weekly Forecast: XAU/USD looks to extend rebound ahead of FOMC Minutes
Gold (XAU/USD) takes offers around $1,773, down 0.35% on a day, as European traders brace for Monday’s bell. In doing so, the yellow metal refreshes intraday low amid the broad US dollar rebound.
The US Dollar Index (DXY) adds 0.05% to the day’s open while refreshing Monday’s peak near 92.57. That said, the greenback gauge dropped the most in two months on Friday after Michigan Consumer Sentiment Index marked the heaviest slump in 10 years.
The greenback gauge’s latest recovery could be linked to the worsening coronavirus conditions that in turn challenge the global economic rebound from the pandemic. That said, the National Institutes of Health’s (NIH) Director Dr. Francis Collins appeared on Fox News and cited fears of witnessing 200,000 cases per day readings of the US infections. CNN also mentioned that the country last reported 200,000 average cases in January while also spotting the US Centers for Disease Control and Prevention (CDC) data suggesting a 300% jump in hospitalizations among people in their 30s.
Elsewhere, daily covid cases from Australia jumped to the fresh one-year whereas China and the UK, as well as Eurozone, reports a bit easy virus figures of late. However, the latest disappointment from China’s Retail Sales and Industrial Production also magnifies the risk-off mood.
Furthermore, comments from Minneapolis Fed President Neel Kashkari, saying per Reuters, that he wants to see a ‘few more’ strong labor market reports before tapering bond purchases, also cite policymakers’ cautious mood and help the USD bulls to firm-up controls.
It’s worth observing that the Taliban’s takeover of Afghanistan and the global ire over the same, recently by New Zealand President Jacinda Ardern, joins the US-China tussles to weigh on the risk appetite.
Against this backdrop, the US 10-year Treasury yields drop 3.4 basis points (bps) to 1.263% after declining the most since July 06 the previous day whereas the S&P 500 Futures snap four-day uptrend, down 0.25% by the press time.
Given the lack of major data/events, coupled with the risk-aversion-backed USD rebound, gold is likely to remain pressured, at least for now, amid a light calendar.
Technical analysis
Gold takes a U-turn from 21-day EMA while portraying the latest pullback amid bearish MACD.
However, a four-month-old horizontal area surrounding $1,755 should restrict the quote’s immediate downside ahead of dragging gold prices to $1,738 and the $1,700 threshold.
In a case where oscillators keep favoring the downtrend past $1,700, the latest low near $1,687 and the yearly bottom surrounding $1,676 will be the key to watch.
Alternatively, 21-day EMA and a two-month-long horizontal line, respectively around $1,784 and $1,790, guards the commodity’s short-term upside.
Even if the recent bearish bias of MACD backs the gold buyers past $1,790, the 200-day EMA near $1,805 and a descending trend line from June 01, around $1,809, will be the key hurdles to the north.
Gold: Daily chart
Trend: Short-term weakness expected