Good morning traders,
Prices for the precious metal, GOLD, closed at 1,861.17, after placing a high of 1,875.13 and a low of 1,852.27. Overall, the movement of gold remained bearish throughout the day. After posting gains for two consecutive weeks, the yellow metal posted its worst weekly loss in six months. The drop in gold prices was recorded as 5% last week. The reason behind the falling gold prices was the strength of the US dollar, which regained its safe-haven status in the latest round of global risk aversion efforts.

On Friday, during one of the earlier trading sessions, the US Dollar Index (DXY), which measures the value of the US dollar against a basket of six major currencies, rose by 0.5%, to 94.795, which was the highest level in two months. The DXY rose by 2% this week and by almost 3% overall in September so far. The strong US dollar weighed heavily on the prices for the yellow metal on Friday.

On the data front, the macroeconomic data for the United States, which was released on Friday, came in against the US dollar, but failed to reverse the movement of the gold prices. At 17:30 GMT, the Core Durable Goods Orders showed a drop to 0.4% in August, against the projected 1.0%, weighing on the US dollar. The Durable Goods Orders for August also fell to 0.4%, compared to the expectations of 1.1%, putting pressure on the greenback, and ultimately capping further losses in the gold prices on Friday.

Meanwhile, the fears that the next round of US Stimulus measures will not be announced before the US Presidential elections on November 3 has weighed on the market risk sentiment. In the absence of further support from the US government, the number of Americans filing new claims for unemployment benefits increased unexpectedly last week. In early September, almost 26M Americans filed jobless claims.

The rising number of coronavirus infections and the depressed labor market recovery are pushing Congress and the White House to provide Americans with another rescue package. This has raised the uncertainty in the market, and the greenback has benefited as a result.

Furthermore, the concerns over the escalating US-China tensions escalated, when UNGA Secretary-General Antonio Guterres warned against a new cold war. He said that the world was moving in the wrong direction, and steps should be taken to avoid a new cold war. He said that the global economy could not survive the significant fracture that the world’s leading economies have been heading towards with their respective trade, internet, financial and artificial intelligence rules.

These concerns also weighed on risk sentiment and supported the safe-haven greenback, ultimately weighing on the prices for the yellow metal. However, the gold losses were limited, as the outlook for the precious metal remains positive, because global economic recovery will need more stimulus from central banks to battle the winter wave of the coronavirus.

Daily Technical Levels
Support              Resistance
1,862.20              1,868.80
1,859.00              1,872.20
1,855.60              1,875.40
Pivot Point:        1,865.60

Choppy trading in the precious metal, GOLD, continues, due to a lack of major fundamentals in the market. The closing of the Doji candle on the daily timeframe is likely to drive upward movement in the market until the 23.6 Fibonacci retracement level of 1,877. On the higher side, the bullish breakout at 1,877 may lead gold prices towards the 38.2% Fibo level of 1,895. Below 1,877, the gold price could drop until the 1,858 and 1,846 levels. A neutral bias prevails in the market today. Good luck!