- Gold price extends bull-bear tug-of-war into the second straight day.
- Global growth concerns support gold while Fed’s tapering bets limit its upside.
- Daily technical setup still favors the bears as 200-DMA appears elusive.
Gold price enjoyed good two-way businesses before closing Thursday, modestly flat on the day. Gold price rose as high as $1818, clinching fresh three-week highs amid resurfacing concerns over slowing global economic growth, as Delta covid variant flareups reach Europe. Some of the main Asia-Pac nations are back under covid lockdown restrictions, thanks to the new strain, which threatens the global economic recovery. Safe-haven assets such as gold, Treasuries, the yen and the CHF got a boost amid risk-aversion while a meltdown in the US Treasury yields triggered a sharp decline in the dollar.
However, the ECB’s shift towards a new inflation target combined with rising Fed’s tapering expectations knocked off gold from higher levels, as the metal hit a daily low of $1794. Weak US Jobless Claims data and negative US stocks helped revive the dollar’s safe-haven demand, adding to the retreat on gold price. The yellow metal managed to recapture the $1800 mark into the close.
This Friday, gold price appears to lack a clear directional bias, ranging in Thursday’s trading band near $1800. Although it remains on track to book the third straight weekly advance, as the narrative of slowing economic recovery continues to support. Gold traders remain hopeful that recovery headwinds would compel central banks to maintain a prolonged accommodative monetary policy stance. However, gold’s further upside appears at risk, as the risk-off market profile could likely keep the haven-demand for the US dollar alive, weighing negatively on the USD-denominated bullion. Markets will continue to take cues from the dynamics in the yields and the greenback amid a light US docket. Fresh covid updates and Fed Monetary Policy Report could offer some near-term trading opportunities, as an eventful week draws to an end.
Gold Price Chart - Technical outlook
Gold: Daily chart
The bearish call for gold price remains intact, despite Thursday’s brief advance to three-week highs and the bulls yielding a daily closing above 21-Daily Moving Average (DMA), now at $1796.
As observed on the daily chart, gold price spotted a Doji candlestick a day before, which suggests buyer exhaustion after the recent recovery rally.
A Doji candlestick yet again in Friday’s trading so far also backs the view that the bullish momentum appears to be weakening, as bears fight for control.
Further, the 14-Relative Strength Index (RSI) trades flatlined but still below the midline, adding credence to a potential downside.
To the upside, three-week highs of $1818 will offer strong resistance, above which the slightly softer 200-DMA at $1827 could be challenged.
Alternatively, the 21-DMA will offer immediate support should the downside pressure gain momentum.
The next relevant support is seen at the horizontal 100-DMA at $1790. A daily closing below the latter could open floors towards a retest of the two-month lows at $1751.
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