- Gold price stalls the upside, as fresh covid vaccine optimism lifts market mood.
- US dollar attempts a bounce but easing Fed’s tapering expectations keep a lid.
- Gold price will take cues from risk tone and USD dynamics for fresh directives.
Gold price stormed through the $1800 barrier, reaching the highest levels in three weeks at $1806 on Monday. The blistering rally in gold price could be mainly attributed to two factors, with the first one being broad-based US dollar softness amid easing Fed’s tapering expectations. Meanwhile, gold’s safe-haven allure got a boost after concerns intensified over the global economic recovery amid the continuous spread of the Delta covid variant. In fact, the virus concerns have led to watering down of the Fed’s hawkish expectations, weighing on the dollar ahead of this week’s Jackson Hole Symposium. Further, the downbeat US Markit Preliminary Manufacturing and Services PMIs exacerbated the pain in the greenback, strengthening the buying interest around gold price.
This Tuesday, gold price is retreating from multi-week highs, testing the bearish commitments near $1800, as an improvement in the risk sentiment weighs on the safe-haven metal. Markets cheer the renewed covid vaccine optimism after the Food and Drug Administration (FDA) on Monday granted full approval to Pfizer/ BioNTech’s COVID-19 vaccine, making it the first in the US to win the coveted designation. The vaccine approval alleviated the tensions around the Delta variant contagion. The risk-on mood appears to cap the tepid bounce seen in the US dollar while fuelling over a 1% rally in the Treasury yields, which makes the non-yielding gold less attractive.
Next of relevance for gold price remains the US second-tier housing data alongside the incoming covid updates. However, the broad market sentiment and the US dollar price action will remain the key drivers for gold price going forward.
Gold Price Chart - Technical outlook
Gold: Daily chart
Gold’s daily chart shows that the upside has stalled just below the powerful hurdle at $1811, which is the confluence of the 100 and 200-Daily Moving Averages (DMA).
If the downside pressure accelerates, gold price could drop further towards the bearish 50-DMA at $1791, below which the horizontal 21-DMA at $1787 could get tested.
The 14-day Relative Strength Index (RSI) has turned lower but holds well above the midline, suggesting that any downside attempts could be temporary.
However, gold bulls will need acceptance above the aforesaid strong resistance at $1811 to unleash additional gains towards the $1820 round figure. The buyers will then target the August highs of $1832.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD struggles near multi-month low; looks to US CPI for fresh impetus
AUD/USD languishes near a multi-month low during the Asian session on Wednesday and seems vulnerable amid a bullish USD. Expectations that inflationary import tariffs from US President-elect Donald Trump will push up prices and limit the scope for the Fed to cut rates remain supportive of elevated US bond yields.
USD/JPY sits near its highest level since July, close to 155.00 as traders await US CPI
USD/JPY stands firm near its highest level since July 30 amid speculations that a fragile minority government in Japan will make it difficult for the BoJ to tighten its monetary policy further. Moreover, fears that US President-elect Donald Trump might again hit Japan with protectionist trade measures continue to undermine the JPY.
Gold price oscillates around $2,600, just above a nearly two-month low ahead of US inflation
Gold price consolidates its recent heavy losses to the lowest level since September 20 as bears opt to pause for a breather ahead of the crucial US CPI report, which will influence Fed rate-cut expectations and provide a fresh impetus.
Ripple could rally 50% following renewed investor interest
Ripple's XRP rallied nearly 20% on Tuesday, defying the correction seen in Bitcoin and Ethereum as investors seem to be flocking toward the remittance-based token. XRP could rally nearly 50% if it sustains a firm close above the neckline resistance of an inverted head and shoulders pattern.
Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out Premium
What a week – the US election lived up to their hype, at least when it comes to market volatility. There is no time to rest, with politics, geopolitics, and economic data promising more volatility ahead.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.