Dramatic Dip in Gold – Ready for Sell Limit?

During Monday’s Asian trading session, the price of the safe-haven metal, gold, recovered some of its early-day losses. However, it remained depressed around the lows of late June, after the biggest drop in eight weeks. The GOLD prices plunged below $1,700 for the first time in the last five months, amid a splendid recovery in the US dollar.

The greenback rose sharply following the upbeat US labor report, which showed a rise in nonfarm payrolls (NFP), to 943K, beating the market expectations of an 870K increase by far. The gains in the greenback were further bolstered by the chatter surrounding the Fed’s tapering and infrastructure spending talks in the Senate. The upticks in the US dollar were seen as one of the key factors that kept the gold prices under pressure.

Alternatively, the mounting coronavirus figures from Japan keep challenging the market trading mood, which may support the safe-haven gold prices. As per the latest report, the number of cases of the Delta strain in Tokyo have risen, with 4,066 new cases recorded on Sunday, which was the last day of the Summer Olympics – this was the fifth consecutive day with over 4,000 new cases.

Looking forward, the market traders will keep their eyes on the US economic docket, which highlights FOMC Member Bostic’s speech, which is up for publishing today. Meanwhile, virus updates and stimulus news will also be crucial to follow.

Currently, gold’s immediate resistance remains at the 1,757 level, marking a 50% Fibonacci retracement level. A bullish crossover at this level could lead the gold price towards the next resistance level of 1,774 (61.8% Fibonacci retracement level).

Conversely, the support holds at a 38.2% Fibonacci level of 1,737. A bearish crossover at this level could lead the GOLD price further down, towards the 1,716 support level. A bearish bias dominates below the 1,757 level today. Good luck!