XAU/USD Surge Above 1,765 Pivot Point
During Tuesday's Asian trading hours, the safe-haven-metal price extended its overnight gaining streak and drew some strong bids around well above $1,775 as the U.S. Dollar Index dropped 0.23% to 93.727 marks amid weaker-than-expected U.S. factory data. As a result, the dollar's bearish bias was considered a significant factor, providing extra support to the dollar-denominated commodities (gold).
Meanwhile, the market risk-off-sentiment, induced by various circumstances, played a significant role in bolstering yellow-metal prices. The positive sentiment surrounding gold was also bolstered by sluggish U.S. factory output and China's weaker growth in Q3. Besides, the Reserve Bank of Australia's (RBA) most recent monetary policy minutes underlined the Delta COVID-19 variant's risk to the country's economic recovery, which pushed investors toward safe-haven assets and enhanced the appeal of the precious metal. In addition, India, the world's second-largest gold consumer, saw a 252 percent increase in gold imports to $24 billion in the April-September period, owing to increased festival demand and the lifting of coronavirus restrictions.
The weak U.S. factory output and China's slower growth in Q3 continued to weigh on market sentiment. As a result, the safe-haven precious metal received extra support from a generally softer tone in the equity markets. Market worries were exacerbated by Monday's poor Chinese macro data, which revealed that the country's economic growth slowed drastically from 7.9% to 4.9 percent in the 3rd-quarter. Moreover, the Reserve Bank of Australia's (RBA) most recent monetary policy minutes emphasized the risk that the Delta COVID-19 variation raised doubts over Australia's economic recovery. Concerns that the current widespread increase in commodity prices might feed inflation and disrupt the global economic recovery were considered a crucial element that gave gold a boost.
According to factory data released on Monday, industrial production in the United States fell 1.3 percent month over month in September and rose a smaller-than-expected 4.6 percent year over year.A global semiconductor shortfall contributed to a drop in motor vehicle production, demonstrating that supply restrictions impede COVID-19 recovery.
A weaker U.S. dollar:
The rise in gold prices was further aided by the emergence of new selling around the U.S. dollar, boosting dollar-denominated commodities such as gold. Following a minor pullback in U.S. Treasury bond yields, the USD saw some additional supply following the previous day's solid two-way price moves. This was seen as a significant aspect that served as a positive for the dollar-denominated commodity. Meanwhile, the previously released downbeat U.S. data also played a major role in undermining the dollar. Moreover, the increasing bets that monetary policy will normalize faster in other countries also contributed to the U.S. losses.
Elsewhere, India, the world's second-largest gold consumer, saw a 252 percent increase in gold imports to $24 billion in the April-September period, owing to increased festival demand and the lifting of coronavirus restrictions. This, in turn, was viewed as a significant element that bolstered gold prices.
Market participants believe the Fed will start unwinding its huge post-pandemic stimulus before the end of the year. Fears of a faster-than-expected rise in inflation have prompted investors to price in the probability of an interest rate hike in 2022. As a result of the hawkish signals from major central banks, traders may be hesitant to make aggressive bullish wagers on non-yielding gold and curb gains.
Looking forward, no significant market-moving economic news is expected, putting gold at the mercy of broader market risk sentiment and bond yields. However, expected comments by Catherine Mann, a member of the BoE's MPC, and Governor Andrew Bailey may provide gold a boost. Later in the U.S. session, Fed Governor Michelle Bowman's remarks will impact USD price dynamics and create some exciting gold trading chances.
GOLD Intraday Technical Level
Support Resistance
1756.81 1787.01
1744.08 1807.48
1724.61 1819.21
Pivot Point: 1776.28
GOLD - Technical Outlook
Gold continues to trade bullish and is now priced at $1,775 per ounce. The technical side of gold is suggesting strong bullish bias. The RSI has surged above 50 and it’s suggesting a bullish trend in gold on a 4-hour timeframe.
The 1,772 level, on the other hand, is gold's immediate support. If the 1,772 level is broken, a sell-off might ensue till the 1,765 and 1,760 levels are reached. On the upside, gold's following resistance levels remain at 1,777 and 1,787, respectively.
We might anticipate a bearish correction in bullion on Tuesday, particularly below the 1,782 mark. Gold bullish bias dominates above 1,765 and vice versa. All the best!
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.