XAUUSD Current price: $1,697.19
– The American dollar benefited from the risk-averse mood and solid US data.
– Wall Street remains on the back foot while government bond yields soar.
– XAUUSD has broken below the $1,700 threshold and remains bearish despite being oversold.
Spot gold broke below the $1,700 threshold and fell to a fresh one-month low of $1,688.71 a troy ounce as the dollar extended its rally at the beginning of the new month. Concerns about slowing global growth and overheated inflation maintained speculative interest on the defensive and away from riskier assets, moreover after China put 21 million people under lockdown.
In a risk-averse environment, the greenback outpaced every other safe-haven rival amid better than anticipated US data. The ISM Manufacturing PMI remained steady at 52.8 in August, beating the expected 52, signaling economic expansion. Furthermore, the Prices Paid registered 52.5, down 7.5 points compared to the July figure of 60 and the lowest reading since June 2020.
US Treasury yields, in the meantime, surged to fresh multi-week highs. The yield on the 10-year note is currently at 3.25%, while that on the 2-year note hovers around 3.51%. Wall Street, in the meantime, extends its negative route.
Gold price short-term technical outlook
XAUUSD trades near the 2022 low of $1,680.82, sharply down for a third consecutive day. Technical readings in the daily chart support a test of the mentioned yearly low, as indicators head firmly south near oversold readings without signs of downward exhaustion. At the same time, the 20 SMA accelerated its slide far above the current level while below the longer ones.
Gold is oversold in the near term, and according to the 4-hour chart, although there are no signs bears would give up. Technical indicators maintain their downward slopes at extreme levels, with the RSI currently at 25. At the same time, the slump extended below all of its moving averages, which reflects sellers’ strength.
Support levels: 1,688.70 1,680.80 1,669.30
Resistance levels: 1,703.90 1714.10 1,729.25
Read USD remains up