Gold prices are taking offers to renew intraday highs near $1,775, up 0.30% a day before Wednesday’s European session. Market analyst Anil Panchal notes that the yellow metal extended the early week’s recovery from the 21-DMA, supported by the weakness of the US dollar. cryptocoin.com We have compiled Anıl Panchal’s analysis to monitor the developments that may affect gold prices.
The number of hawks in the Fed is increasing
The analyst says the US Dollar Index (DXY) has recovered from the three-week low tested on Tuesday, easing near 93.70, while the dollar indicator prints a six-day downtrend, ignoring tighter Treasury rates. However, US 10-year Treasury yields retreated from their highest level since the end of May, with upside pressure of 1.8 basis points (bps) to 1.652 percent. The analyst makes the following assessment:
While the Fed’s tapering talks appear to support stronger US Treasury rates, hopes for US stimulus and a lack of key data/events are allowing the US dollar to consolidate its gains at multi-day tops.
Reuters’ latest poll of economists identifies fears of reflation, pointing to the risk of an earlier rate hike. According to Reuters, Fed Chairman Christopher Waller also used expressions supporting the rate hike in his latest speech:
If inflation continues to rise at its current pace in the coming months rather than falling as expected, Federal Reserve policymakers may need to adopt a more aggressive policy response next year.
Global economic developments
Helge Berger, the International Monetary Fund’s (IMF) China Mission Chief and Deputy Director of the Asia and Pacific Department, underlines the risks posed by the world’s second largest economy. The diplomat signaled that the Evergrande risk to China is under control for now, but that the country is accumulating downside risks.
Meanwhile, there are the IMF’s comments from the previous day, which refer to 8.0% expectations for 2021 GDP growth from China, and those who say that “the economic recovery remains unbalanced,” according to Reuters. The analyst says inflation headlines, Fed speeches and China-related fears could delight gold traders ahead of Friday’s preliminary data on October PMIs.
Gold prices technical analysis: Gold is in bullish consolidation mode but multiple resistances will push buyers
Market analyst Anil Panchal points out that besides gold’s recovery from the 21-DMA, a three-week support line is targeting the 200-DMA barrier around $1,795, with support from the bullish MACD signals, and points to the following levels in his technical analysis:
However, the monthly high and mid-September peak around $1,801 and $1,808, respectively, will challenge the gold bulls afterwards. In a situation where gold prices manage to surpass the $1,808 resistance, the horizontal resistance at $1,834 will be the focus.
The analyst continues his analysis after reminding that gold prices could target the indicated support line and the 21-DMA, which is around $1,771 and $1,760, respectively:
The golden bears could take control on a daily close below $1,760. Following this, multi-support near $1,740 and monthly low near $1,721 could attract market attention. Overall, gold prices are in bullish consolidation mode, but multiple resistances will push buyers.
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