News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Live look at silver bulls below: https://t.co/inTarCwxNO
  • Silver is not behaving as one might expect in light of tumbling yields and notable USD weakness $SLV $XAGUSD $SI_F https://t.co/IgmjUxQbCE
  • The week will start to pick up in earnest with #FAANG earnings and US confidence. DailyFX's @JohnKicklighter discusses what's going on 👇 https://t.co/Aw8deX76nm
  • Big spike by the cable into the London fix. $GBPUSD up 50-pips in the last 15 minutes alone. US Dollar getting offered more broadly too. $USD #Forex #Trading https://t.co/HC3mb4DMFn
  • $MRNA Moderna says manufacturing partners face delays outside of the US -BBG
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.42% 🇬🇧GBP: 0.15% 🇪🇺EUR: 0.07% 🇨🇦CAD: -0.24% 🇦🇺AUD: -0.37% 🇳🇿NZD: -0.77% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/WzfKjhVb89
  • In the most recent CFTC report, sentiment in the USD has flipped net long for the first time since March 2020. Get your market update from @JMcQueenFX here:https://t.co/b2SLBieMth https://t.co/pNr8HMmG3E
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.41% Wall Street: -0.41% France 40: -0.57% Germany 30: -0.59% US 500: -0.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/i4iI8v7dDT
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Gold: 0.22% Oil - US Crude: -0.09% Silver: -0.77% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/ZBo4PP2Vq2
  • 🇺🇸 CB Consumer Confidence (JUL) Actual: 129.1 Expected: 123.9 Previous: 128.9 https://www.dailyfx.com/economic-calendar#2021-07-27
Gold Price Recoil From Chart Resistance as the US Dollar Strengthens

Gold Price Recoil From Chart Resistance as the US Dollar Strengthens

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • Gold prices fell for a second day to test a key support at US$ 1,910 as the US Dollar strengthened
  • The metal remains in an “Ascending Channel”, the lower bound of which serves as a key support
  • An immediate resistance level can be found at US$ 1,930 – the 50-Day SMA
Advertisement

Gold prices have entered a period of consolidation since coming off the all-time high (US$ 2,075) in early August. Recently, gold seemed to have found strong support at US$ 1,870 (the 76.4% Fibonacci retracement) and has since rebounded, entering into an “Ascending Channel” as highlighted in the chart below.

Technically, gold prices have formed a few bearish harmonic pullbacks (highlighted in black straight lines) from early August to the end of September, with downward pressure prevailing. Immediate resistance levels could be found at US$ 1,930 (50-Day SMA), followed by US$ 1,942 (50% Fibonacci retracement) and then US$ 1,973 (38.2% Fibonacci retracement). Breaking above this resistance could clear the way for further upside and confirm a medium-term trend reversal.

As gold prices remain in the channel, the near-term momentum appears biased towards the upside. Immediate support levels could be found at US$ 1,910 and then US$ 1,895 – where the channel’s lower bound and the 100-Day SMA are found.

Gold PriceDaily Chart

Gold Price Recoil From Chart Resistance as the US Dollar Strengthens

In the absence of geopolitical catalysts, gold prices may continue to follow the direction of the US Dollar (DXY) and drift alongside risk sentiment. The inverse correlation between gold prices and DXY can be seen on the chart below.

A drastic swing in risk appetite on Tuesday led a rebound in the US Dollar, which simultaneously weighed on precious metal prices. Asia-Pacific stocks erased earlier gains at mid-day trading. Chinese balance of trade data came in at $37 billion, falling short of a $58 billion estimate due to an unexpected surge in imports.

Similarly, silver prices have retraced from a three-week high to test an immediate support at US$ 24.58 – the 50% Fibonacci retracement.

Gold Prices vs. US Dollar Index – Past 12 Months

Gold Price Recoil From Chart Resistance as the US Dollar Strengthens

Source: Bloomberg, DailyFX

From a longer-term perspective, however, gold prices are still supported by the overall macro environment (ultra-low interest rates) and ample liquidity conditions, even as short-term consolidation is underway.

IG Client Sentiment indicates that gold traders are heavily leaning towards the long side, with 74% of positions net long, while 23% are net short (chart below). As gold prices have consolidated, retail traders have added both long (+7%) and short (+4%) positions overnight. Compared to a week ago, traders have added to long (+3%) while reducing short (-9%) exposure.

Gold Price Recoil From Chart Resistance as the US Dollar Strengthens

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES