Gold drops in the day 0.27% on US dollar strength
- XAU/USD recover some losses from the FOMC minutes.
- Worsening market conditions weighs in the yellow metal.
- The US dollar remains strong on Feds’ talks about bond tapering.
Gold drops in the day 0.27%, trades at $1,782.79. The yellow metal has not been able to pare losses against the greenback and looks towards closing lower in the day.
Worsening market conditions, like around the globe recent covid outbreaks and the risk of a global economic slowdown, continue to drive flows toward safe-haven assets. Adding to this, expectations that the Fed could begin tapering its asset purchases later in the year, kept today’s US dollar strength in place.
On US economic data published earlier in the day, the US Department of Labor (DOL) showed that there were 348K initial claims for unemployment benefits during the last week, down from 377K previous. While the Philadelphia Fed Manufacturing Activity Index dropped to 19.4 in August from 21.9.
XAU/USD technical outlook
XAU/USD trades around $1,781. The dip toward $1,774-75 was retraced almost immediately suggesting that yesterday’s low at $1,777 is strong support. The daily moving averages remain positioned above the spot price with the 50-DMA being close to the high of the day around $1,795. Nevertheless, this will be a challenge for gold buyers to break above the $1,800-15 range. In the meantime, the trend remains down. Although, recent daily price action suggests that sellers need a close below Monday’s open at $1,778, so they can get follow-through towards lower prices.