XAU/USD Current price: $1,754.85
- US data again boost the US dollar across the boards.
- US yields keep rising ahead of next week’s FOMC meeting.
- XAU/USD short-term outlook negative, under $1,745 next potential target near $1,720.
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Gold prices tumbled on Thursday, affected by rising US yields, a stronger dollar, and technical factors. The ounce troy dropped to $1,745, hitting the lowest level in a month. Economic data from the US triggered a rally of the dollar and also the decline in Treasuries. The US Dollar Index rose toward 93.00, reaching the highest level since August 27. The US 10-year yield jumped to 1.35%, matching last week's high and then pulled back. The 1.35% barrier has become critical, and a break higher could trigger more of the current moves in favor of the dollar and against gold.
Following Wednesday’s upbeat US economic data, on Thursday the retail sales report showed a 0.7% increase in August, above expectations; and the Philly Fed soared to 30.7, against market consensus of a modest decline to 19. Those figures took more relevance ahead of the FOMC meeting next week. Gold prices could remain under pressure until Fed’s announcement as market participants continue to digest the latest positive economic numbers.
Gold price short-term technical outlook
The sharp decline sent technical indicators to the downside. The RSI is at oversold extreme levels but still pointing south with no signs of favoring a consolidation ahead or a rebound. The slide was capped by the $1,745/50 support area that is a strong barrier. A break below should open the doors to more losses, probably targeting the $1,725 area.
A bullish correction could find resistance at $1,775. The band between $1,775/80 is now a critical obstacle. If XAU/USD recovers levels above, it could alleviate the bearish pressure. To negate the negative bias, gold needs a daily above $1,833 while in the short-term, the downside pressure remains intact, even after the $50 sell-off.
Support levels: 1,745.00 1,723.50 1,714.95
Resistance levels: 1,764.50 1,779.45 1,795.00
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