October 5, 2022 13:38:11
After showing good recovery moves Gold’s price traded in the red on Wednesday. A risk aversion in the market compels investors to place fresh bids for the US dollar. The recent upside in the precious metal was preliminarily sponsored by a weaker greenback, falling US Treasury yields, and a shift in Fed rate hike expectations amid disappointing economic data.
The yellow metal climbed nearly $70, reversing the late September losses. However, this turnaround would be sustainable, investors look for further confirmation. So far, the non-yielding asset enjoyed market speculation of a less hawkish Fed in forthcoming meetings. Further, the UK government’s U-turn on tax cuts also added to the optimism in the market.
However, the current gains look saturated now as the price is struggling near $1,730. After the Reserve Bank of New Zealand raised the interest rate by 50bps the expectation is ripe for a similar tone from the Federal Reserve. The precious metal already feeling the heat from a fresh upswing in the US Treasury yield across the curve.
The short-term trend could be attributed to the employment data of the US due to being released this Friday. A stronger data would strengthen a more aggressive Fed tone, weighing on the prospects of the gold price.
From a technical perspective, a breakout above $1,730 may open the gate towards $1,750 and $1,770. However, a dip back under $1,710, the next key levels of support could be found at $1,700 and $1,680 respectively.
The price remains pressured below the critical 50-day exponential moving average as for the past three sessions, the bulls are struggling near this level. Further, the bearish slopping line from the high of $1,807.94 made on August 9 acts as a strong upside barricade for the buyers.
We expect the price could test the descending trend line near $1,690 amid renewed selling pressure. Should this level crack more downside toward $1,660 cannot be ruled out.
On the other hand, sustained buying pressure is needed to breach the moving average and if that occurs, then the immediate resistance could be located near $1,760.
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