Gold Price Forecast: XAU/USD remains unvaried above $1,750 on USD boomerang

• Gold fails to capitalize on the initial gains as the fresh trading week begins.
• Afresh China’s Evergrande risk, outbreak of coronavirus in Asia-Pacific, and inflationary concerns supports USD.
• Lower US T-bond yields limit the downside for the previous metal.

Gold prices retreated after hitting a near two-week high on Monday. As the day began a weaker dollar pushed the precious metals higher offsetting the US Federal Reserve tapering concerns. 

The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, droops below 94.00 to its lowest since September 29 before rebounding above 94.10 in immediate response to the latest Evergrnade risk. The greenback  found grounds on renewed concerns about China’s property sector and looming US labor data.

In the latest development, share trading in debt-laden Evergrande was stopped in Hong Kong without any immediate explanation, rekindlinding  investors' nerves about the possibility of global contagion risk of the property giant fallout. Market remained concerned that a collapse at Evergrande could hurt an already fragile Chinese economy and spell a cast on global growth. Hong Kong developer Hopson plans to acquire about 51% of Evergrande management unit, which means little for bondholders.

In addition to that, as per CNBC report, the US Trade Representative Katherine Tai will announce on Monday that China is not complying with US-China trade agreements, also adding to the sour risk sentiment, which in turn supports the US dollar on its safe-haven appeal.

Furthermore, New Zealand’s Prime Minister Jacinda Ardern called for a snap-lockdown on additional regions as the Delta variant COVID-19 variant spreads outside Auckland with more than 30 new cases. The SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund holdings dropped 0.4% to 986.54 tonnes on Friday.

Asian stock market remains cautious on the fate of the debt-ridden China’s Everngradne and its ripple effect on the global stock market, supporting the gold prices near the lower levels.

 Technical levels

Gold prices have taken refuge near $1,720 after falling from the high of $1,834 on September 3. The prices started the new month series on a higher note following the previous day’s gains on Friday.

XAU/USD daily chart

The Moving Average Convergence Divergence (MACD) holds below the midline with a neutral stance . Any downtick in the MACD indicator would amplify the selling pressure and the prices could once again fall below the $1,750 level. A daily close below the $1,750 would entice bears to retest the $1,740 horizontal support level. Furthermore, XAU/USD bears could meet the low made on Thursday at $1,722.31

Alternatively, if price sustains intraday high and breaks the 21-day Simple Moving Average (SMA) at $1,770 it could retrace back to the $1,780 horizontal resistance level followed by the high made on September 16 at $1,796. A daily close above the 21-day and 50-day SMA crossover near $1,800 would push the prices toward the $1,820 horizontal resistance level.

XAU/USD additional levels