Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

Gold spots (XAUUSD) dipped below the $1920/ounce mark on Tuesday, falling to as low as $1,909.72/ounce during the session amidst a strengthening U.S. dollar and rising Treasury yields. Investors remain concerned about hawkish signals from central banks, with the Fed hinting at another rate increase this year. The dollar’s ascent to a 10-month high and 10-year Treasury yields reaching a 16-year peak have curbed gold’s appeal. While China’s gold imports via Hong Kong saw a rebound in August, annual imports remain lower.  

Despite supply constraints and the People’s Bank of China easing import restrictions, gold’s shine waned. A potential U.S. government shutdown adds to market jitters. Investors eye the Fed’s preferred inflation gauge, the PCE price index, for future direction. Gold’s resilience may hinge on dollar strength and economic indicators. As uncertainty lingers, the precious metal outlook remains under scrutiny. 

Technical 

Gold finds itself grappling with a bearish tone on the 4-hour chart. Currently priced at $1,919.35 per ounce, the metal is dancing beneath the influence of key moving averages. 

The 20-period Exponential Moving Average (EMA), represented by the green line, has recently taken a dive beneath both the 50-EMA (blue) and 100-EMA (orange). This development highlights the short-term downside pressure the metal is facing. 

Furthermore, the Relative Strength Index (RSI) stands at 35.92, showcasing the market’s inclination towards bearish sentiment. The RSI-based Moving Average (M.A.) echoes this sentiment, recording at 43.42. Short-term trading opportunities could exist should the price action maintain its push downward towards the $1,909.68/ounce support level. A breach below the $1,909.68/ounce support level could bring $1,900.88/ounce into focus. 

However, there’s a glimmer of optimism if gold can break through the daily pivot and the EMA resistance. Such a move could open doors to the initial resistance at $1,928.66/ounce. Should the bullish momentum persist, traders may set their sights on the $1,937.08/ounce and $1,947.20/ounce resistance levels for short-term gains. 

Summary 

As gold faces pressure from a resurgent dollar and higher bond yields, persistent downward pressure could bring the $1,909.68/ounce and $1,900.88/ounce in the short term. However, a push above the daily pivot point and EMAs could signal a change in sentiment, likely bringing the $1,928.66/ounce resistance level into focus in the near term. 

Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.