Gold Price Analysis: XAU/USD reverses a dip to sub-$1900 levels, lacks follow-through
- Gold once again showed some resilience below the $1900 mark and staged an intraday bounce.
- A modest USD pullback from highs extended some support to the dollar-denominated commodity.
- Stable opening in the US equity markets kept a lid on any strong gains ahead of Powell’s testimony.
Gold edged higher during the early North American session and has now moved back closer to the top end of its daily trading range, around the $1917-18 region.
The commodity once again showed some resilience below the $1900 round-figure mark and managed to regain some traction, albeit lacked any strong follow-through buying. The intraday uptick was supported by a modest US dollar pullback, which tends to benefit the dollar-denominated commodity.
This coupled with a softer tone surrounding the US Treasury bond yields further drove some flows towards the non-yielding yellow metal. Investors seem convinced that the Fed Chair Jerome Powell will reiterate to keep interest rates lower for longer during his congressional testimony on Tuesday.
However, some stability in the US equity markets undermined the precious metal's safe-haven status and kept a lid on any strong intraday positive move. This makes it prudent to wait for some strong follow-through buying before positioning for any further intraday appreciating move.
From a technical perspective, the overnight fall confirmed a near-term bearish break through a descending triangle. This coupled with the fact that technical indicators on the daily chart have just started drifting into the negative territory support prospects for additional weakness.
Acceptance below the $1900 mark will reaffirm the bearish bias and prompt some aggressive technical selling. This might then turn the commodity vulnerable to accelerate the slide back towards testing August monthly swing lows support near the $1863-62 region.
Technical levels to watch