Gold to Achieve 50% Fibonacci Retracement – Buckle up for a Buy Signal

During Thursday’s Asian trading session, the yellow metal, gold, managed to stop its declining streak of the previous day. It drew some modest bids around the $1,750 level, as the recent outbreak of COVID-19 and the extensions of lockdowns remain a risk to economic recovery.

Besides the softer tone surrounding the equity markets, this benefited the prices of the safe-haven metal, gold. The bearish bias surrounding the US dollar, triggered by multiple factors, was seen as another critical factor that boosted the dollar-denominated commodity (gold).

Despite the upbeat vital economic data from the US and China, the market trading sentiment failed to extend its positive performance of the previous day. It started to flash red on the day, as the highest COVID death toll in the US in several days, and the steady rise in numbers of cases in China and Australia, keep weighing on the market trading sentiment.

This was evident from a softer tone in the equity markets, which boosted the safe-haven gold prices. Furthermore, the geopolitical tension between the US and China burdened the market trading mood even more.

The downbeat economic data from Australia also played a significant role in undermining the market trading mood. The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 4.4% in August, on the back of economic data. However, the negative appearance of the global stocks highlights the risk-off sentiment, which tends to benefit the dollar-denominated commodity, gold.

The precious metal, gold, is trading at 1,756, with a bullish bias. Gold is testing the 50% Fibonacci retracement level, trying to break above 1,757. If this happens, investors will have an excellent opportunity to capture a buy trade in gold until levels of 1,751 and 1,770.

On the higher side, the XAU/USD may soar further until the 61.8% Fibonacci retracement level remains at the 1,777 level. At the same level, the 50 periods simple moving average will also extend resistance. However, looking at the leading indicators, like the RSI and the MACD, both suggest a bullish bias in gold. Let’s consider taking a buy trade over the 1,755 level today. Good luck!