Gold Slips to $1,786 Level – Brace to Trade Triple Bottom Bounce-off - Forex News by FX Leaders
Gold - XAU/USD Chart

Gold Slips to $1,786 Level – Brace to Trade Triple Bottom Bounce-off

Posted Thursday, September 16, 2021 by
Arslan Butt • 3 min read

During Thursday’s Asian trading session, the precious metal failed to halt yesterday’s bearish rally, remaining well offered near the $1,800 level. The yellow metal did not benefit from the bearish market sentiment, as the US Consumer Price Index (CPI) favored equities, while weighing on U.S. Treasury yields.

However, the ongoing declines could be mainly attributed to some technical selling near a technically significant 200-day SMA. Meanwhile, the strength of the broad-based US dollar was seen as another critical factor that kept GOLD prices under pressure. Investors remain worried about the fast-spreading Delta variant of the coronavirus and a global economic slowdown, which are having a bearish impact on the market trading sentiment.


The  uncertainty in the market was further fueled by disappointing Chinese macro data, which underscored recent signs of slackening economic momentum in the world’s second-largest economy. This, in turn, boosted demand for safe-haven assets and helped to limit deeper losses in GOLD, which is trading at 1,786.24, and consolidating in the range between 1,784.17 and 1,796.22.

COVID Woes & Anxiety Over the Fed’s Next Moves

The market trading sentiment failed to put a stop to its previous long downward performance, and remained depressed throughout the day. Long-lasting worries over the fast-spreading Delta variant of the COVID-19 virus, and fears of a global economic slowdown kept the market trading sentiment under pressure.

The deterioration of the market trading sentiment was further bolstered by disappointing Chinese macro data that was released recently, which reinforced recent signs of a slow-down in the economic momentum of the world’s 2nd-largest economy. As a result, S&P 500 futures reversed early Asian gains, while the US 10-year Treasury Yields fell one basis point (bp), to retest 1.297%. This, in turn, has boosted the demand for traditional safe-haven assets, which could lend some support to gold, and help to cap its losses.

Apart from the worsening COVID conditions, the cautious sentiment ahead of the US Federal Reserve’s next move is putting additional downside pressure on the market sentiment. It should be noted that the Fed will hand down its latest policy decision next week, which could provide clues on the central bank’s timeline.

US Dollar Continues to put Pressure on Gold

On the USD front, the broad-based US dollar maintained yesterday’s subdued bias, languishing near the middle of its range of the past month, against major peers on Thursday, as traders look ahead to next week’s Federal Reserve policy meeting, for indications on how soon the US central bank will start to taper stimulus. Meanwhile, the modest upticks in the USD could be linked to the risk-off market mood, which tends to underpin the US dollar, due to its safe-haven allure. So, the strength of the broad-based greenback was seen as another key factor that kept gold prices under pressure, because of its safe-haven status.

Looking forward, market traders will keep their eyes on the Fed’s latest policy decision, which is due next week. It could provide clues about the central bank’s timeline. In the meantime, the coronavirus headlines will be key to watch.

Gold (XAU/USD) – Technical Outlook

On Thursday, the precious metal, gold, is trading at the 1,787 level, having broken through the 1,790 support level. To the downside, the yellow metal is finding immediate support at around 1,787, with a bearish breakthrough below this level exposing the metal to 1,780.

Gold - XAU/USD Chart

Daily Support and Resistance

S3 1,765
S2 1,781.19
S1 1,787.79
Pivot Point 1,797.38
R1 1,803.98
R2 1,813.57
R3 1,829.76The immediate resistance level remains at 1,790, and above that, the daily pivot point may extend resistance to the 1,796 level. On an hourly period, gold has recently closed three black crows patterns. Investors are displaying a significant selling tendency. As a result, if the metal breaks through the 1,787 support level, it could go after the 1,780 level. Lastly, gold’s RSI and stochastic support a negative tendency. Good luck!

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