“Fear of Collapse” Analyst Gave Levels That Gold Price Will See!

The golden bears regained control as they entered the European session on Monday, down 0.36% on the day near $1,748, ahead of major weekly events, according to market analyst Anil Panchal. At the same time, the yellow metal beats its lowest level in five weeks amid negative risk sentiment.

Tapering probability is a determinant of gold price

Analyst Anil Panchal says that despite banking holidays in Japan and China, Evergrande-linked stock woes and cautious pre-Fed market sentiment have bolstered the US Dollar Index (DXY), respectively, and put pressure on gold prices. The analyst also stated that the COVID-19 fears and concerns regarding the US incentive and the debt limit also forced the mood in the markets, making the following assessment:

Increasing optimism over US stimulus and expanding US debt limits to ensure slow but gradual economic recovery illuminates the possibility of Fed tapering and bolsters double bears. In addition, escalating tensions between China and its Western allies, namely the US, Australia and the UK, are also weighing on market sentiment and bolstering the safe-haven demand for the US dollar.

cryptocoin.com As you can follow from its news, Axios recently reported that US Senator Joe Manchin supports President Joe Biden’s postponement of the spending package vote to 2022. On the contrary, Speaker of the US House of Representatives Nancy Pelosi said she expects a two-sided approach to addressing the debt limit, according to Reuters. Also, Bloomberg reports, citing an editorial in the Wall Street Journal (WSJ), that US Treasury Secretary Janet Yellen recently renewed her call for Congress to raise or suspend the debt ceiling in October. Therefore, doubts about money flow and spending limits in the US continue to challenge the mood of the markets.

Global developments and their possible effects on gold

Also, fears of a Lehman-like collapse of China’s Evergrande amid $300 billion in debt and 1,300 projects in more than 280 cities, as well as multiple links abroad, are straining market sentiment. Amid these games, S&P 500 Futures are down 0.80% on the day at press time, while the US Dollar Index (DXY) is up 0.15% on the day at press time, hitting a one-month high near 93.33.

Looking forward, Anil Panchal notes that a drop in China and Japan could trigger the precious metal’s corrective pullback near key short-term support, but the bearish outlook remains intact ahead of Wednesday’s Federal Open Market Committee (FOMC).

Gold technical analysis: Corrective pullback expected

According to market analyst Anil Panchal, the descending bearish divergence of the MACD and the oversold RSI line has challenged gold sellers recently, although a downward trend line near $1,750 from last Wednesday is keeping them hopeful. The analyst therefore expects a clear downside break of the new sell-off, the 61.8% Fibonacci retracement of the August-September recovery around $1,744, and points to the following levels in his analysis:

Following that, the August 09-10 low near $1,723 and the round $1,700 figure will challenge the golden bears before leading commodity prices to yearly lows near $1,687. Alternatively, a corrective retracement beyond the stated resistance line around $1,750 would target the latest top around $1,768 before heading towards the late August $1,780 levels. It’s worth noting that $1,800 and $1,822-$23 could entertain the bulls before emphasizing the monthly high again tested around $1,834 in July.

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