Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
The strengthening US dollar and rising yields continued to weigh on the non-yielding bullion, helping the gold spots (XAUUSD) over 0.2% lower during the session and on course for a second consecutive session of the week in the red. The yield on the 10-year US Treasury note reached the highest intraday level since November after rising over four basis points on Tuesday, weighing on the non-yielding bullion, which is trading around a six-week low.
News from China also weighed on the appeal of the yellow precious metal after the People’s Bank of China (PBoC) announced a second cut to its key rate in an attempt to boost its stagnating economic recovery post-COVID. The Chinese economy recovery has worried investors, with the recent economic indicators from the region disappointing. The Chinese retail sales, fixed asset investment and industrial production released earlier today also came in lower than expected, adding to the concerns about the economic activity in the country, weighing on gold.
Technical
The 4-Hour chart shows that the price is currently trading within a descending channel trading pattern. The price is below the daily pivot point and the 50-EMA. The price structure suggests that the trend is bearish in the short term. Therefore for a bear case, a push below the six-week low of $1,902.66/ounce could trigger a push to lower levels, with $1,892.72/ounce and $1,878.05/ounce support levels likely acting as targets.
However, a sustained push above the daily pivot point would bring the resistance level at $1,931.44/ounce, corresponding to the 50-EMA, into play. A push above the 50-EMA would confirm the change in sentiment, leaving the breakout above the channel and the $1,946.15/ounce resistance level within the bulls’ reach.
Summary
The appearance of the descending channel since July is suggestive of a strong bearish pressure, and should the momentum persist past the six-week low, short-term trading opportunities could exist towards the $1,892.72/ounce support level and $1,878.05/ounce next.
Sources: TradingView, Trading Economics, Reuters, MarketWatch.
This material is provided for informational purposes only and does not constitute financial, investment or other advice. No opinion contained in this material constitutes a recommendation by Trive Financial Services Malta Limited or its author as to any particular investment, transaction or investment strategy and should not be relied upon in making any investment decision. In particular, the information does not take into account the individual investment objectives or financial circumstances of the individual investor. Trive Financial Services Malta Limited shall not be liable for any loss, damage or injury arising from the use of this information.
