- Gold recovery remains limited below $1,900 area.
- XAU/USD lacks momentum amid the brighter market mood.
- Bearish confirmation below $1,850 support might accelerate the downtrend.
Gold futures have failed on their attempts to return above $1,900 level on Monday and the yellow metal has pulled back to the previous days’ range, with downside attempts supported above $1,870.
Gold lacks strength amid a brighter market mood
XAU/USD’s bullish attempts have been stopped right below the $1900 level on Monday as the brighter market mood has dented demand for the safe-haven gold.
The upbeat Chinese industrial production and the stronger than expected foreign investment figures have confirmed that China’s economy is accelerating after the pandemic shock. This has improved investors' confidence in the global economic outlook.
Furthermore, Moderna’s announcement that their COVID-19 vaccine is 94.5% effective, has contributed to brightening sentiment triggering a significant rally on equity markets. The Dow Jones Index has hit record levels near 30,000 and is 1.24% up at the time of writing. The Nasdaq and S&P Indexes are 0.39% and 0.81% up respectively.
XAU/USD remains trapped between $1,850 and $1,900
Bullion remains moving sideways within a $50 range below $1,900, consolidating losses after last week’s slump from $1,960 highs. On the upside, the pair should break above $1,900 and $1,910 psychological level and the confluence of the 50 and 100-day SMAS to ease bearish momentum and return towards $1,960 (intra-day high) and $1,995 (September 1 high).
On the contrary, further decline below $1,850 (later-September lows) would increase bearish pressure and might drive the pair towards $1,795 (mid-July lows) and finally $1,760, the 50% Fibonacci Retracement of the March – July rally.
Technical levels to watch
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