Gold (XAU/USD) is starting to look a little feverish once again despite managing to pull higher at the end of last week. The pullback over the last two sessions is not yet overextended and is still likely to offer new buyers a better chance to get in, but there isn’t much wiggle room left before the outlook starts to look slightly bearish.
So far the bullish trend since XAU/USD reversed higher back in August is mostly intact, with small reversals along the way allowing for another leg higher. The question now is whether this is another one of those momentum building reversals or if there is more to it, especially given how strong the pullback has been over the last two days compared to the other times.
The mood in the market has been pretty upbeat so far which isn’t helping the demand for safe havens and, as the Fed gears up for a potential taper towards the end of the year, the central bank’s inaction is no longer as strong of an appeal for those looking for a greater return from their investments in non-yielding assets like gold.
Friday’s push higher on weaker than expected NFP data showed once again that moves in the price of gold are mostly conditioned by the US Dollar at this point, and with there still being room for a stronger currency as yields recover their pre-pandemic levels, the outlook for gold on the medium term isn’t looking too great.
This is also true if the pandemic gets out of hand once again, with new cases rising rapidly worldwide, as the US Dollar can outperform no matter the state of the US economy as it will pick up safe haven demand, outshining gold as protective trade.
XAU/USD Monthly chart
The move so far in the 5 first trading days of September has been pretty much null, with a non-existent body and small tails showing a lack of momentum. The August candlestick shaped out to be a clear sign of indecision, with a long downside tail showing the bearish meltdown being reversed to finish the month completely flat, which makes it harder to build up stronger moves in September. So far XAU/USD has found strong resistance at the 38.2% Fibonacci retracement from the August 2020 highs, an area that has stopped bulls in the last three months running. To the downside, the 50% Fibonacci (1,763) is likely the best area of support going forward.
Traders of all levels and abilities will find something to help them make more informed decisions in the new and improved DailyFX Trading Education Centre
— Written by Daniela Sabin Hathorn, Market Analyst
This content was originally published here.
New Delhi: Gold has fallen from its August 2020 high of Rs 56,200 per 10 grams to Rs 11,500, as investors are moving…
GOLD FORECAST: JACKSON HOLE TO SPUR XAU/USD PRICE VOLATILITYPrecious metals have staged impressive rallies over recent…
12MM x 2MM) 61/2 "(L) x 1/2" (W) x 1/16"(H) or (165MM x 12MM x 2MM) Representative significance White: make…
Share Great Content for Our Resource Section
MoneyForGold.com is a resource site created for those looking to sell their personal collection of gold - whether it’s jewelry, coins, bars, antiques, etc., anything made from gold can be sold for quick cash. We encourage visitors to signup and share quality “Money For Gold” resources.
Have a question or comment? Email us at: firstname.lastname@example.org