On Wednesday afternoon, spot gold remained under pressure, trading below the 1890 mark, while the DOLLAR remained firm.
FXStreet analyst Dhwani Mehta has written a brief analysis of gold’s next performance. Here’s how:
Gold extended its rally from a two-month low yesterday but was rejected at $1,900 but closed near the session high.
The main catalyst behind the gold rally was a sustained correction in the dollar from a two-month high amid cautious optimism.
Expectations of a possible US coronavirus rescue bill and strong economic data from China boosted sentiment, although investors remained cautious ahead of the first debate of the US presidential election due to the resurgence of the coronavirus.
In trading so far Wednesday, gold has turned downward after failing to regain the $1,900 mark.
The dollar rallied broadly after the us election debate, pushing gold down $10.
While President Donald Trump’s warning about postponing the us election has dampened risk sentiment and increased demand for the dollar as a haven, the debate has largely failed to impress.
It remains to be seen whether the dollar can sustain its rally ahead of U.S. ADP and GDP data, while sentiment on Wall Street will also play a key role in gold’s direction.
From a short-term technical point of view, gold has been confirmed on the hourly chart to break through a rising wedge to lost wedge support of $1892.55.
A break at $1,900 prompted short sellers to break through 21 – and 200-hour moving average (HMA) support, followed by 50 – period support at $1,881.
In addition, the hourly relative strength index (RSI) is flat in the midline, indicating a drop from daily low temperatures and a pullback. However, if the rally continues to regain its 200-day moving average of $1894, gold could resume its upward momentum to $1,900 and above.