Gold gained some positive momentum on the last trading day of the week and retraced some of the previous day’s losses. Market analyst Haresh Menghani notes that the precious metal maintains its bid tone as it enters the European session and refreshes daily tops around the $1,760 region in the last hour, but lacks follow-up. Meanwhile, concerns have resurfaced over China’s indebted real estate sector after midsize developer Fantasia Holdings failed to pay the $206 million bond due on Oct. 3, causing an official default. According to the analyst, this was also a key factor that gave some support to the safe-haven gold, albeit a combination of factors limiting gains.
“Awaited NFP report will determine Fed’s next move”
cryptocoin.com As you follow in the news, a temporary ceasefire in the debt ceiling stalemate in the US Congress has allayed concerns of a possible government debt default this month and boosted investor confidence. In fact, the Senate voted 48 to 50 to extend the debt ceiling until early December. The bill will now be sent to the House of Representatives for approval before being sent to President Joe Biden for signature. The development triggered a classic risk-taking action in global stock markets. Analyst Haresh Menghani notes that the expectation of an early tapering by the Fed may deter traders from aggressive buying around the yellow metal with no yield.
Investors appear convinced that the Fed will begin rolling back its pandemic-era stimulus as soon as November. Markets also seem to have started pricing in interest rate hike expectations in 2022 amid concerns that the continued rise in crude oil/energy prices will stimulate inflation. Hawkish Fed expectations pushed the yield on the benchmark 10-year US government bond to a four-month high near the 1.60% threshold, which continues to support the US dollar. According to Haresh Menghani, this could act as a headwind for dollar-denominated commodities, including gold, as investors stand on the sidelines ahead of closely watched US monthly employment figures.
The popularly known NFP report will be released in the early hours of the North American session and expectations are that the economy created 488,000 new jobs in September. Meanwhile, the unemployment rate is expected to fall to 5.1% from 5.2% in August during the reported month. The analyst determines that the data will affect market expectations regarding the Fed’s next policy move and will provide a new direction momentum for gold prices by stimulating the dollar in the near term.
Gold price technical view: the $1,750-48 region is a strong support
Looking at the technical picture, Market analyst Haresh Menghani states that the gold price has been fluctuating in a familiar trading range since the beginning of this week, emphasizing that it would be prudent to take a sustained break in either direction before trading aggressively. Therefore, any next move could continue to face resistance near the $1,770 zone or the week-and-a-half tops touched on Monday. Haresh Menghani highlights the following levels in his analysis:
The next relevant hurdle is near the $1,774-75 region, ahead of the $1,783-84 area. Above this, the bulls are likely to aim to reclaim the $1,800 round figure. Second, it coincides with the all-important 200-day SMA and should act as an important milestone for short-term traders.
The $1,750-48 region or the weekly trading range lower boundary now appears to have emerged as immediate strong support and a convincing break below will set the stage for a slide towards the $1,729 intermediate support during September, around the $1,722-21 region. it states. Continuing his analysis, Haresh Menghani makes the following predictions:
Continuation of some selling could render gold vulnerable to accelerate the downside trajectory towards the $1,700 challenge, before dropping to several-month lows around the $1,687-86 region touched on Aug.
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