Gold Supported Amid Safe-haven Appeal – Quick Trade Plan
Today in the Asian trading hour, the Yellow-metal price managed to stop its previous-day downward performance and drew some fresh bids
Arslan Butt•Tuesday, August 31, 2021•3 min read
Today, during the Asian trading hours, gold managed to stop its downward performance of the previous day and drew some fresh bids around the $1,815 level, as a weakening US dollar gave the yellow metal a boost.
The broad-based US dollar hovered near two-week lows, against a basket of other currencies on the day. The declines in the greenback were seen as one of the key factors that kept the gold prices higher, as the price of GOLD is inversely related to the price of the US dollar. On the other hand, rising economic fears in China and geopolitical woes from the Middle East boosted the yellow-metal prices even further.
Meanwhile, the previously released downbeat data from the US and China raised doubts over the recovery of the two largest economies in the world, as they are still facing the impact of recent strict lockdowns to curb the latest COVID-19 outbreaks. Thus, the mounting fears of the world’s largest economic slowdowns keep challenging the upbeat mood in the market, contributing to the gains in gold.Furthermore, the return of all the US troops from Afghanistan and the Sino-US bickering match exerted some further positive impact on the safe-haven gold prices. Elsewhere, the cautious market sentiment ahead of this week’s US Nonfarm Payrolls (NFP) is probing the market bulls.
At the time of writing, the precious metal price was trading at 1,817.39, and consolidating in the range between 1,809.80 and 1,817.51. Moving on, the investors are now keeping their eyes on the US economic data, which is due later in the week, to gain clues as to when the US Federal Reserve will begin asset tapering.
Despite the ever-increasing lockdowns due to the coronavirus, and their impact on global economic recovery, the market trading sentiment maintained its upward performance of early in the day, remaining well bid during the second half of the Asian session. The S&P 500 Futures remained bullish around the all-time high, above 4,500, rising by 0.05% and coming close to 4,527 during early Tuesday trading.
However, the easing in the number of COVID cases is helping to keep the market trading sentiment positive, amid a lacklustre session. Not only was there a reduction in the number of infections in Australia, from the all-time high of the previous day, but the decline in the daily numbers of COVID cases in the UK, to a two-week low, also kept the market trading sentiment strong. Therefore, the prevalent buying bias surrounding the market trading sentiment was a key factor that kept the US dollar lower and helped the market trading sentiment to stay positive.
The broad-based US dollar failed to stop its bearish early-day rally, dropping close to two-week lows against a basket of other currencies on Tuesday. The declines came after Fed Chairman Jerome Powell failed to provide a clear timeline for asset tapering and interest rate hikes during the Jackson Hole symposium last week. He only suggested that the asset tapering timeline could begin some time during 2021.
In addition to this, the upbeat market mood put some extra burden on the safe-have US dollar prices. Therefore, the bearish sentiment surrounding the greenback was seen as a major factor that kept the gold price higher, as the price of gold is inversely related to the price of the US dollar.
Moving on, market traders will keep their eyes on the second-tier data/events from the US. Meanwhile, Friday’s jobs report will also be key to watch. Apart from this, coronavirus headlines and trade/political jitters will also keep the markets entertained.
Gold – XAU/USD – Technical Outlook
At the 1,818 level, gold is trading with a bullish bias, traveling north to retest the resistance level of 1,819. However, the metal has entered an overbought zone, and it is currently undergoing a bearish decline below the 1,823 resistance level. To the downside, the immediate support levels for gold are 1,813, 1,807 and 1,795, Furthermore, a bearish breakthrough at 1,795 would push
GOLD to the 1,785 level.
Daily Support and Resistance
S3 1,737.59
S2 1,772.28
S1 1,794.7
Pivot Point: 1,806.97
R1 1,829.39
R2 1,841.66
R3 1,876.35On the upside, a break through the 1,821 resistance level extends the metal to the 1,829 and 1,841 levels. The
RSI level on the hourly period is still in the selling zone. As a result, until the 1,807 level, the chances of a selling bias remain high. Above 1,807, the bullish bias remains solid, and vice-versa. Best wishes.
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
Save
Join 350 000+ traders receiving Free Trading Signals
