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  • Gold faced rejection near the $1900 mark and stalled this week’s recovery move.
  • A modest pickup in the USD demand exerted some pressure on the precious metal.
  • A fresh leg down in the equity markets failed to impress bulls or lend any support.

Gold edged lower through the early European session and was last seen hovering near the lower of its daily trading range, around the $1885 region.

The precious metal faced rejection near the $1900 barrier and witnessed some fresh selling on Wednesday, stalling this week’s goodish rebound from 100-day SMA support near the $1849-48 region. The pullback marked the first day of a negative move in the previous three and was sponsored by a modest pickup in the US dollar demand, which tends to weigh on the dollar-denominated commodity.

The first debate between Republican President Donald Trump and Democratic rival Joe Biden also failed to move the markets. However, Trump’s warning that the election result might not be known for months added to the already uncertain environment. This comes amid the ever-increasing coronavirus cases and provided a goodish lift to the greenback’s status as the global reserve currency.

Apart from a broad-based USD strength, a positive tone around the US Treasury bond yields further collaborated towards driving flows away from the non-yielding yellow metal. Meanwhile, Trump’s comments triggered a fresh wave of the global risk-aversion trade, albeit failed to impress bullish traders or lend any support to the safe-haven precious metal.

From a technical perspective, the XAU/USD retreated from a previous strong support breakpoint, now turned support, and now seems vulnerable to slide further. Hence, a subsequent fall towards the $1862 horizontal level, en-route 100-day SMA support near the $1849-48 region, now looks a distinct possibility.

Market participants now look forward to the US economic docket, highlighting the release of ADP report, the final Q2 GDP report, Chicago PMI and Pending Home Sales data. This, along with speeches by influential FOMC member will influence the USD price dynamics and produce some meaningful trading opportunities later during the North American session on Wednesday.

Technical levels to watch