Gold (XAU/USD) extends sell-off into a third straight day on Wednesday, having settled at $1900 on Tuesday. Renewed US-China tensions and Fed’s optimism are set to boost the greenback while the $1863 August low is eyed, FXStreet’s Dhwani Mehta reports.
Key quotes
“The yellow metal remains undermined by the relentless haven demand for the US dollar seen across the board, as investors shun riskier assets amid coronavirus resurgence in Europe and the UK. US Federal Reserve (Fed) Chair Jerome Powell’s testimony and solid US housing data collaborated with the US dollar surge. Powell said the US economy remains resilient throughout the crisis.”
“Renewed US-China tensions, following US President Donald Trump’s speech at the United Nations (UN) General Assembly on Tuesday, continue to temper the risk sentiment and render dollar-supportive. Trump said China must be held accountable for mishandling the coronavirus outbreak. Attention now turns towards the US Markit Manufacturing PMI and Day 2 of Powell’s testimony on the economic impacts of COVID-19 before the House Select Committee.”
“Gold has resumed its recent downside momentum, having confirmed a symmetrical triangle breakdown on the hourly chart, opening floors for a test of the pattern target near the August month low of $1863. The path of least resistance remains to the downside, as the bearish Relative Strength Index (RSI) probes the oversold territory at 31.17, allowing for more declines.”
“Any recovery attempts could meet the immediate upside hurdle at $1901/02, where the bearish 21-hourly Simple Moving Average (HMA) coincides with the pattern support now resistance. Further north, the next cap sits at the downward-sloping 50-HMA at $1913, above which Tuesday’s high of $1920 could be put to test. Only a sustained move above the 100-HMA at $1931 could likely offer some reprieve to the XAU bulls in the near-term.”
Share
