- Gold reversed from the highest level since August 19, losing more than $30.
- XAU/USD continues to consolidate around $1930/40 area.
Gold is falling modestly on Monday after being unable to hold onto gains and following recovery of the US dollar during the American session. The ounce peaked at $1,962, but it quickly turned to the downside. It bottomed at $1,927, and as of writing, it stands around $1,930.
The yellow metal pulled back as the US Dollar Index erased losses, rising to the 93.30. Equity prices in Wall Street are up, with the Dow Jones gaining 0.90% and the Nasdaq 0.45%. US yields are higher on Monday offering support to the greenback and weakening gold.
Medium to long-term outlook
XAU/USD continues to trade sideways in the near-term, with price unable to gravitate far from the $1,935/45 area as the US dollar stabilizes. The bullish primary trend is still intact but in the short-term, the correction still appears to be dominating. A close below $1,925 would expose $1,900 and the August low at $1,860 while above $1,975 gold could resume the upside, for a test of $2,000.
“We lift gold short-term targets to ~$2,200/oz. 6-12m targets breaching $2,400/oz seems plausible. The record pace of ETF investor inflows, a weakening US$ and negative real yields are the primary drivers for the push higher”, mentioned CitiBank analysts.