- Mixed sentiment and USD plays confine gold price in a tight range.
- Gold’s four-hour technical setup shows a lack of clear directional bias.
- US NFP holds the key but ADP and ISM Services PMI eyed in the meantime.
Gold price ended in the red for the third straight session on Tuesday, as traders preferred to stay on the sidelines ahead of the key US Nonfarm Payrolls release, which will provide fresh signals on the Fed’s next policy action. The US dollar traded mostly mixed against its six major rivals, in absence of a strong catalyst, as markets fretted over growing covid cases globally and China’s clampdown on the technology sector. Meanwhile, gold price suffered at the hands of the hawkish comments from two of the Fed policymakers, as they supported a potential taper plan amid an improvement in the US labor market. However, the recent weakness in the US Treasury yields helped gold price hold its footing abov\e the $1800 mark.
Heading into a busy docket this Wednesday, gold price is attempting a comeback, as the dollar remains on the defensive amid a cautious market mood and a minor bounce in the Treasury yields. From a broader perspective, the greenback remains pressured amid the dovish Fed and weak US economic data while covid concerns help put a floor under the buck.
Looking forward, gold price is likely to waver in a narrow range as investors await fresh hints from the US ADP jobs data on the labor market recovery. Also, of note remains the US ISM Services PMI data, impacting the dollar valuations, in turn, gold price.
Gold Price Chart - Technical outlook
Gold: Four-hour chart
The four-hour technical setup for gold price shows that the downward-sloping 21-Simple Moving Average (SMA) at $1815 is testing the bulls’ commitment, as the range play above $1800 extends.
On the other hand, the mildly bullish 50-SMA at $1810 is protecting the downside. Note that the price has not given a four-hourly candlestick closing below the latter since Tuesday’s mid-European session.
A range breakout is imminent in either direction, although with the Relative Strength Index (RSI) holding flat at the midline, gold traders lack a clear directional bias for now.
A sustained break above the 21-SMA could boost the buying interest, with gold bulls targeting the August 2 highs at $1820.
However, the 50-SMA support caves in on a sustained basis, then gold price could see a sharp drop towards the ascending 200-SMA at $1799. Ahead of that the August 2 lows of $1806 could be put at test.
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
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.