Gold prices are struggling to recover from daily lows near $1,795 on Monday. According to market analyst Rekha Chauhan, the decline in benchmark US Treasury bond yields supports the current upward movement in prices.
“Dollar strength keeps precious metals under pressure”
The weak stock market, concerns about the rapid spread of the coronavirus delta variant and its impact on the global economic recovery continue to support near lows, according to analyst Rekha Chauhan.
The analyst states that gold takes cues from the main central bank’s views on contraction and economic stimulus, and comments:
The Fed’s official hawk comments point to a contraction before the end of this year and are putting pressure on the upside. This, in turn, helped the dollar gain traction. The strength of the US dollar keeps precious metal gains in check. A higher USD valuation makes gold more expensive for holders of other currencies.
Gold struggles below $1,800
cryptocoin.com As you can follow from our news, gold prices are struggling below $1,800 after the previous week’s downward momentum. Rekha Chauhan says gold prices are struggling to hold the psychological $1,800 level amid expectations for the US Fed’s tapering timing and a stronger US dollar. The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of six major currencies, remained strong above 92.50, while benchmark US 10-year Treasury yields rebounded after higher-than-expected US inflation. The US Department of Labor announced the Producer Price Index (PPI), which rose to 0.7% in August after rising 0.1% in July. This rate was above the market expectations of 0.6%.
The precious metal is generally considered a hedge against inflation. But higher U.S. Treasury yields translate into higher opportunity costs for holding interest-free gold. Traders assess that the data may force the Fed to tighten monetary policy sooner than expected. However, gold prices failed to find traction after high inflation data.
Falcons on the Fed rise
Hawkish Fed members continue to put pressure on gold prices. Philadelphia Fed President and CEO Patric Harker said the FOMC should start shrinking soon this year, joining other members. Cleveland Federal Reserve Chair Loretta Mester said she would support the central bank’s plan to cut asset purchases this year.
Comments are that Fed members’ hawkish views on contraction measures from the previous week are advancing. Atlanta Fed President Raphael Bostic said the economy is in a relatively strong position and it would be appropriate to cut back on its bond-buying program this year. Additionally, last week, the European Central Bank (ECB) kept interest rates at historic lows of 0.00%, but said it would slow the pace of pandemic bond purchases for the rest of the year.
Gold price technical analysis: Unable to maintain upside momentum
Analyst Rekha Chauhan said gold prices extended their upward rally from the low of $1,687.78 on August 9 and reached $1,834.02 on September 6 last week. says it has withdrawn to gold from $1,800.
Continuing his gold technical analysis, Rekha Chauhan points to the following levels:
The Moving Average Convergence Divergence (MACD) is above the middle line but bears bearish. Any dip in the MACD indicator will confirm the downside momentum with an immediate downside target placed at the 38.2% Fibonacci retracement level of $1,777.11. Alternatively, the formation of a Doji candlestick signals indecision among traders. If prices reverse direction, the first upside target will appear at the previous session’s high at $1,803.94, followed by the $1,810 horizontal resistance zone.
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