Gold Price Analysis: XAU/USD struggles for direction, flat-lined below $1740 level


  • A combination of factors assisted gold to reverse an intraday dip to the $1730 region.
  • The cautious mood, sliding US bond yields extended some support to the commodity.
  • A strong pickup in the USD demand capped any meaningful upside for the XAU/USD.

Gold reversed an intraday dip to the $1731 region and edged back closer to daily tops during the early European session, albeit lacked follow-through. The commodity was last seen trading just below the $1740 level, nearly unchanged for the day.

Investors turned cautious after the US, Canada, UK and EU – in a rare, coordinated move – imposed sanctions on Chinese officials over human rights violations in Xinjiang. This was evident from a weaker trading sentiment around the equity markets, which, in turn, extended some support to the safe-haven XAU/USD.

The flight to safety was reaffirmed by a fresh leg down in the US Treasury bond yields, which further drove some flows towards the non-yielding yellow metal. That said, a strong pickup in the US dollar demand kept a lid on any meaningful gains for the dollar-denominated commodity, warranting caution for bullish traders.

The greenback remained well supported by the prospects for a relatively faster US economic recovery, bolstered by the passage of a massive US stimulus package. The optimistic economic outlook was reaffirmed by Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen's prepared remarks for testimony on Tuesday.

Even from a technical perspective, the XAU/USD, so far, has struggled to move back above the $1740-42 supply zone. The lack of any strong follow-through buying suggests that the recent bounce from multi-month lows might have run its course and supports prospects for the resumption of the recent sharp pullback from multi-year tops.

Hence, any subsequent strength is likely to be seen as a selling opportunity and runs the risk of fizzling out rather quickly. This, in turn, should cap the upside near a previous strong support breakpoint, now turned resistance near the $1760-65 region, which should now act as a key pivotal point for short-term traders.

Technical levels to watch

XAU/USD

Overview
Today last price 1739.44
Today Daily Change 0.33
Today Daily Change % 0.02
Today daily open 1739.11
 
Trends
Daily SMA20 1733.53
Daily SMA50 1791.87
Daily SMA100 1829.9
Daily SMA200 1860.61
 
Levels
Previous Daily High 1747.12
Previous Daily Low 1727.42
Previous Weekly High 1755.59
Previous Weekly Low 1719.3
Previous Monthly High 1871.9
Previous Monthly Low 1717.24
Daily Fibonacci 38.2% 1734.95
Daily Fibonacci 61.8% 1739.59
Daily Pivot Point S1 1728.65
Daily Pivot Point S2 1718.18
Daily Pivot Point S3 1708.95
Daily Pivot Point R1 1748.35
Daily Pivot Point R2 1757.58
Daily Pivot Point R3 1768.05

 

 

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