XAU/USD reverses from five-day highs and hits fresh daily lows under $1960

William Arsn

  • 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{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and the Nasdaq 0.45{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. 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.


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