Gold Selling Bias Dominates Amid Risk-on Sentiment – Eyes on $1,750 - Forex News by FX Leaders
Gold - XAU/USD Chart

Gold Selling Bias Dominates Amid Risk-on Sentiment – Eyes on $1,750

Posted Friday, September 24, 2021 by
Arslan Butt • 2 min read

GOLD prices closed at $1746.30 after reaching a high of $1777.05 and a low of $1737.70. Gold prices dropped for a second consecutive session on Thursday and reached their lowest since August 11, despite a steep fall in the U.S. dollar.

The U.S. Dollar Index, which measures the greenback’s value against a basket of six major currencies, dropped on Thursday to 92.98. In contrast, 10-year Treasury yields in the United States increased dramatically on the day, reaching their highest level since July 6th, 1.43%. The sudden rise in yields indicated market expectations about real inflation and how quickly the Fed would have to react to control pressures.

XAU/USD

The demand for high-yielding assets such as Treasury Yields surged by more than 1.4% on Thursday after the Federal Reserve announced that it will likely end its pandemic-related stimulus support for the U.S. economy by the middle of next year and begin raising interest rates by the end of 2022. As a result, the non-yielding bullion saw a plunge in its price by about 1.6% in a single day.

The Fed policy meeting also revealed new projections, which showed that half of the officials were ready to increase interest rates next year in response to the high inflation. As we already know, gold is often considered a hedge against inflation, but a potential interest rate hike increases the opportunity cost of holding gold as it does not pay any interest.

The Fed Chair Jerome Powell has also said that the central bank could begin withdrawing its economic stimulus related to asset purchases of $120 billion after November’s policy meeting as long as the U.S. job growth remained reasonably strong through September. However, on Thursday, a rise in the number of U.S. jobless claims from last week weighed heavily on the U.S. dollar and limited the downward pressure on the yellow metal.

On the data front, at 17:30 GMT, the unemployment claims from last week surged to 351K against the projected 322K and weighed on the U.S. dollar, which caused a further loss in the yellow metal. At 18:45 GMT, the Flash Manufacturing PMI in September remained flat with an expected reading of 60.7. The Flash Services PMI dropped in September to 54.4 against the forecast 55.1. At 19:00 GMT, the C.B. Leading Index surged to 0.9% against the projected 0.7% and supported the U.S. dollar, which added to the losses of yellow metal prices.

Gold – XAU/USD – Technical Outlook – Eyes on $1,750

Gold is trading with a bearish bias at 1,750 level, facing immediate resistance at 1,752 level. An intraday pivot point level is extending this level. On the 4-hourly timeframe, the precious metal is trading with a selling bias, as it’s holding below the 50-days SMA (simple moving average) at 1,771 level.

Gold - XAU/USD Chart
Daily Technical Levels

Support Resistance
1730.31 1769.66
1714.33 1793.03
1690.96 1809.01
Pivot Point: 1753.68

On the lower side, gold’s immediate support prevails at 1,740 and 1,727 levels. The failure to break above the 1,752 level can trigger a sell-off in the gold. Thus, the major focus will be on the 1,752 level. On the higher side, gold’s significant resistance stays at 1,766 and 1,782 levels. Let’s consider selling below 1,752 level and vice versa.

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