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Gold Loses Ground thanks to a Stronger US Dollar


The widely traded spot gold futures chart shows that the yellow metal remains on the defensive. The key simple moving averages look flat. However, the bullion is trading below all three simple moving averages as the U.S. dollar is enjoying inflows.

Last week, the U.S. central bank signalled that they could start scaling back monthly asset purchases by November or December of this year. An interest rate hike could happen in 2022. Also helping the greenback, over gold, Evergrande, China’s largest property manager remains at risk of default.

Chinese officials are also signalling that they are reluctant to help the company. This could disrupt the global financial systems. Souring market sentiment is also boosting the U.S. dollar over other safe havens.

Monday European calendar is quiet. European Central Bank President Christine Lagarde is scheduled to give remarks. The United Kingdom has no events scheduled.

The world’s largest economy, the United States, will release monthly core and headline durable goods orders. Also on the U.S. economic calendar, the Dallas Federal Reserve will publish their monthly manufacturing index.

Daily Gold Technical Analysis (XAU/USD)

Looking at the above daily MT 4 price action chart, the spot gold futures (XAU/USD) contract is trading below the twenty,  fifty, one hundred and two hundred (20, 50, 100, 200) day simple moving averages. These simple moving averages also look flat.

The 14 day relative strength index (RSI) is around forty (40) which signals more bearish price action lies ahead for the yellow metal. There is near term support lining up at $1,740 per ounce. The next downside barrier lines up at $1,730 per ounce before $1,720 comes into focus.

On the upside, the 61.8 percent Fibonacci level at $1,770 per ounce is immediate technical resistance. The next upside barrier lines up near the 50 day simple moving average at $1,790 per ounce. The key, psychological level of $1,800 per ounce then comes into the picture.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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