Eyes on ADP Non-Farm Employment Change
Gold prices ended the day at $1759.85, with a high of $1768.95 and a low of $1749.20. After increasing for three consecutive sessions, gold fell on Tuesday amid the resurgence of the US dollar, as traders sought safety in the dollar amid a stock market selloff fueled by concerns over rising energy prices.
The US Dollar Index, which measures the dollar's value against a basket of six other currencies, surged to 94.07 on Tuesday as market concerns about rising oil costs exacerbated existing inflationary pressures. The 10-year Treasury note yield surged to 1.50 percent, adding strength to the greenback and dragging the yellow metal down with it. It was another unpleasant trading day for the gold market, as investors were more focused on short-term developments such as the dollar and yield gains while ignoring the emerging energy crisis, which was driving a negative growth narrative.
On Tuesday, the US stock market experienced a significant selloff due to fears about growing inflation, the energy crisis, the fragility of US-China trade ties, China Evergrande's debt issue, and a deadlock over the US debt ceiling. The aforementioned variables conspired to decrease risk appetite for equities, prompting investors to seek refuge in the US dollar. The rising value of the US dollar then put pressure on the precious metal.
On the data front, the Trade Balance for August revealed a deficit of -73.3 billion against the anticipated -70.5 billion, weighing on the US dollar and capping additional losses in gold around 17:30 GMT. At 18:45 GMT, the September Final Services PMI increased to 54.9 from 54.4 expected, bolstering the US dollar and adding to the decline in gold prices. At 18:54 GMT, October's IBD/TIPP Economic Optimism Index fell to 46.8 from an expected 51.3, weighing on the US dollar. At 19:00 GMT, the ISM Services PMI for September increased to 61.9 from 59.9, supporting the US dollar and putting further negative pressure on gold.
Furthermore, investors were looking forward to the release of non-farm payrolls data in the United States on Friday. It is projected to demonstrate ongoing improvement in the labor market, allowing the Federal Reserve of the United States to begin tapering its monetary stimulus before the end of the year.
Furthermore, Federal Reserve Vice Chairman Randal Quarles stated that US lenders and corporate borrowers must accelerate their transition from LIBOR to new reference rates. He also said that after December 31st, LIBOR might not be used in recent financial transactions.
GOLD Intraday Technical Level
Support Resistance
1749.71 1769.46
1739.58 1779.08
1729.96 1789.21
Pivot Point: 1759.33
GOLD - Technical Outlook
On Wednesday, the precious metal gold was trading at $1,756 with a bearish bias. It is getting immediate support at the 1,754 level, which has been extended by an intraday pivot point. Gold has violated the pivot point support level of 1,762, which is now exposing gold towards the 1,754 support level. On the lower hand, the breakout of the 1,754 level exposes the precious metal towards the 1,747 and 1,739 levels. Further, on the lower side, the violation of 1,739 exposes gold towards the 1,731 level.
On the bullish side, gold’s next resistance stays at the 1,762 level and a breakout of this exposes the pair towards the 1,770 level. The RSI and Stocahstic are supporting a selling trend in gold, thus, the bearish bias dominates below 1,762 and vice versa. Good luck!
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