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GOLD EXTENDS THE PREVIOUS DAY’S RECOVERY FROM A FORTNIGHT LOW, REFRESHES INTRADAY TOP.
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BIDEN-XI TALKS, VACCINE OPTIMISM BATTLES COVID WOES, ECONOMIC FEARS AFTER ECB.
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TREASURY YIELDS REBOUND, S&P 500 FUTURES PRINT MILD GAINS.
Gold(XAU/USD) bulls attack $1,800, up 0.25% intraday near $1,799 heading into Friday’s European session. In doing so, the yellow metals cheer recently positive market sentiment to extend the previous day’s rebound from a fortnight low.
Following the cautious optimism from US President Joe Biden, during his six-pronged strategy speech, the first in seven months talks between Biden and his Chinese counterpart Xi Jinping brightened the mood.
Details suggest that the US side refrains from being too optimistic and term talks as ‘a a broad, strategic discussion’. On the other hand, Chinese media said, “Xi and Biden had a candid conversation on US-China ties.”
It should be noted that Biden’s push for vaccinations and masks join the UK’s approval for booster shots of the covid vaccines to add to the market’s slightly positive mood.
On the same line were cautious optimism conveyed by the policymakers of the US Federal Reserve (Fed) and the European Central Banks (ECB) in their latest public appearances. Adding to the market’s optimism was the reduction in the US Weekly Jobless Claims, 310K versus 335K expected.
Amid these plays, the US 10-year Treasury yields rose 1.1 basis points (bps) to regain a 1.31% level whereas the stock futures rise 0.10% by the press time.
Moving on, the US Producer Price Index (PPI) data for August, expected 0.6% MoM versus 1.0% prior, will be important to watch for intermediate direction. However, the ECB’s passage and an absence of major data/events can keep market players directed towards the risk catalysts for fresh impulse.
TECHNICAL ANALYSIS
Gold keeps the rebound from a two-week bottom but the MACD teases bears and the Momentum line also challenges further upside.
Above all, a convergence of 100-day and 200-day EMA around $1,805 offers a strong resistance to test the gold buyers.
Even if the metal crosses the $1,805 hurdle, a horizontal area from mid-July near $1,834-35 will be a tough nut to crack for the bulls.
Hence, bears can stay hopeful and keep 38.2% Fibonacci retracement of June-August fall, around $1,775, as a short-term target.
However, a daily closing below $1,775 will make gold prices vulnerable to decline towards June’s low of $1,750.