The gold market is exhibiting a corrective fall, with bulls retreating from an intraday high of approximately $1,720 early Tuesday morning in Europe. While technical challenges and worries about early Asian session optimism have recently tested metal buyers, a weaker US Dollar Index (DXY) and promises for further stimulus from Europe, China, and the UK appear to keep gold bulls optimistic.

During the early Asian session, the market mood strengthened as full market resumption increased anticipation of additional measures to combat the oil crisis. Nonetheless, incoming UK Prime Minister Liz Truss has proposed a £130 billion energy plan, while the People’s Bank of China (PBOC) has reduced the Reserve Requirement Ratio (RRR). Furthermore, German/Eurozone politicians are all fighting the recession with a solid drive to safeguard energy firms and stock up on winter supplies.
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Among these bets, US 10-year Treasury yields jumped 2.5 basis points (bps) to 3.21%, while S&P 500 Futures extended their week-start rebound to 3,943, up 0.50% intraday as of press time. Furthermore, the market’s consolidation allowed the DXY to fall from its 20-year high to 109.37 before rebounding to 109.62.

However, the CME’s FedWatch Tool predicts a 60% chance of a 0.75% rate hike in September, down from 75% the previous week. The decrease in the Fed’s hawkish views could be related to the mixed August US jobs report.

It should be emphasized that traders’ reactions from the United States and Canada will be keenly monitored for clear indications when trading GOLD. Geopolitical headlines involving China, Russia, and the United States will also be crucial. Furthermore, the ISM Services PMI for August, which is predicted to be 55.5 vs. 56.7 previously, might provide additional direction to gold bulls.

Gold Technical Outlook

The gold price reached our anticipated target of 1726.60 and encountered firm resistance there, as the EMA50 meets this barrier to add strength. At the same time, stochastic delivers positive signals that contradict the EMA 50 negative.

As a result, we prefer to remain neutral until we receive a clearer signal for the next trend, noting that a break of 1726.60 will cause the price to resume the main bearish trend and head to negative targets beginning at 1755.70. In contrast, a break of 1709.00 will cause the price to resume the main bearish trend and head to negative targets beginning at 1780.00. Today’s trading range is likely between 1700.00 support and 1740.00 resistance.

Today’s projected trend: Choppy