After the US Dollar gained, gold prices are lingering near two-month lows. Moderna demonstrated that its vaccine is effective against the Delta form, which boosted investor confidence. Traders are looking for support at $1,750, which if broken might lead to more losses. Daily Gold Chart Following an almost 1% drop the day before, gold prices traded moderately higher during Wednesday’s APAC session. After prices breached the sustaining trendline of a “Bearish Pennant,” the overall trend appears to be bearish, indicating that further downside is possible (chart above). On Tuesday, the pharmaceutical company Moderna released a lab report demonstrating that its Covid-19 vaccine is effective in creating antibodies against the Delta variation, a recently discovered viral strain from India. The announcement boosted market confidence and pushed the US Dollar higher, putting downward pressure on bullion prices. However, as new virus strains continue to proliferate and evolve, concerns about the vaccine’s production capacity and dissemination around the world remain. The yellow metal has been in a steep correction since the Federal Reserve suggested a hawkish change in monetary policy at the June FOMC meeting, and further strengthening of the greenback might put downward pressure on the yellow metal. Traders are looking for signals about the labor market’s rebound and its implications for the Fed’s policy guidance in this Friday’s US nonfarm payrolls report. Past 12 Months Gold Prices Versus. DXY US Dollar Index Bloomberg and DailyFX are the sources for this information. Since the commencement of the Covid-19 pandemic, gold has been riding the tailwind of ultra-low interest rates and central banks’ quantitative easing, and it may be more vulnerable to a retreat when the monetary policy direction reverses. If a result, as tapering fears mount, near-term momentum may be skewed to the downside. Technical Analysis of the Gold Price Gold prices have most likely created a continuation chart pattern known as a “Bearish Pennant.” It usually comes after a large upward or downward movement and signals a brief consolidation before prices resume moving in the dominating trend’s direction. If prices break below trendline support, a “Bearish Pennant” suggests more downside potential. The 78.6 percent Fibonacci retracement is an immediate support level at $1,750. The MACD indicator created a bearish crossover and has been trending downward, indicating that negative momentum is in control. —- Margaret Yang, a DailyFX.com strategist, wrote this article. Use the comments section below to contact Margaret, or follow her on Twitter at @margaretyjy.
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