Gold prices edge higher on softer dollar
Gold edged higher on Monday, recovering from an eight-month low touched in the previous session, as a weaker dollar lifted bullion’s appeal.
Bullion, however, posted its worst monthly fall since November 2016 in February due to rising U.S. Treasury Yields, which increase the opportunity cost of holding non-yielding gold.
Speculators decreased their bullish positions in COMEX gold and silver contracts in the week to Feb. 23, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Physical gold demand in India gained momentum last week as retail buyers and jewellers lapped up bullion at near eight-month low prices, while Singapore continued to see steady interest for both gold and silver.
· Gold Price Analysis: XAU/USD clings to recovery gains above $1750 level, upside seems limited
Gold edged higher through the early European session and was last seen hovering near the top end of its daily trading range, just below the $1760 level.
Gold managed to regain positive traction on the first day of a new trading week and has now recovered a part of Friday's slump to eight-month lows. The uptick was supported by a softer tone surrounding the US dollar, which tends to benefit the dollar-denominated commodity. Retreating US Treasury bond yields kept the USD bulls on the defensive and extended some additional support to the non-yielding yellow metal.
This makes it prudent to wait for a sustained move beyond the $1760-65 region before confirming that the commodity has bottomed out in the near-term and positioning for any further appreciating move. Market participants now look forward to the release of the US ISM Manufacturing PMI for some short-term trading impetus.
· Gold Futures: Further downside loses traction
Open interest in gold futures markets shrunk for the second consecutive session on Friday, this time by around 8.8K contracts according to preliminary figures from CME Group. Volume, instead, went up for the third session in a row, now by around 60K contracts.
Gold faces the next support around $1,670/oz
Friday’s sharp pullback in gold prices to fresh 2021 lows in the $1,720 mark per ounce was on the back of shrinking open interest, removing some strength of extra downside in the very near-term. Rising volume, however, does not close the door to the continuation of the downtrend, with the next target at the June 2020 lows around $1,670.
Gold Price Forecast: XAU/USD needs acceptance above $1751 to unleash further recovery gains
Gold’s hourly chart shows that the price is breaking through the falling trendline resistance at $1751, at the time of writing.
An hourly closing above that level is needed to unleashing further recovery gains. The Relative Strength Index (RSI) has pierced through the midline to recapture the 50 level.
However, the bearish crossover formed warrants caution for the XAU bulls. The 100-hourly moving average (HMA) cut the 200-HMA from above, confirming a bearish formation.
Therefore, the multi-month lows of $1717 remain on the sellers’ radars, below which the $1700 psychological level could be tested.
On the flip side, a sustained move above $1750 could expose the bearish 50-HMA resistance at $1765. The next critical hurdle is aligned at $1785, which is the confluence of the 100 and 200 averages.
Reference: CNBC, FXStreet
Thai
Eng