XAU/USD flirts with weekly tops around $1,780

Update: Gold

Gold traded with a mild positive bias through the early European session and was last seen hovering near around the $1,778 region, just below weekly tops touched in the previous day. A subdued US dollar price action seemed to be the only factor that extended some support to the dollar-denominated commodity. That said, the risk-on impulse in the markets acted as a headwind for traditional safe-haven assets and failed to assist the XAU/USD to make it through the 200-hour SMA barrier. The global risk sentiment got a strong lift after struggling property giant China Evergrande said it would pay some bond interest due on Thursday.

Apart from this, expectations for an imminent Fed taper announcement further collaborated to keep a lid on any meaningful gains for the non-yielding yellow metal. Hence, the market focus will remain on the outcome of a two-day FOMC policy meeting on Wednesday. Investors will look for clues about the likely timing of when the Fed would being rolling back its massive pandemic-era stimulus. This, along with the latest economic projections and the so-called dot plot, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to gold. This makes it prudent to wait for some follow-through buying before confirming that the recent pullback from the $1,832-34 region has run its course and placing fresh bullish bets.

Previous update: Gold prices print minute gains on Wednesday and lack conviction to break $1,780 convincingly due to a sudden uptick in the greenback following a show from the Bank of Japan (BOJ).

XAU/USD : Daily chart

Gold technical outlook

Gold prices have rebounded from the 61.8% Fibonacci retracement, which is extending from the low made on September 9 at $1,687.78 to $1,754. 

The Moving Average Convergence Divergence (MACD) holds below the midline  with a neutral stance . Any downtick in the MACD indicator would confirm the downside momentum and the prices would approach toward the $1,750 horizontal support level.

A daily close below Monday low could trigger a fresh round of selling in the precious metal. XAU/USD bears would target the low of August 11 at $1,724.

Alternatively, the formation of a Doji candlestick suggests indecisiveness among traders at the upper level. If prices reverse direction then the first upside target would appear at  the 38.2% Fibonacci retracement level at $1,785.

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