• Gold breaks above $1,760 despite the broad US dollar strength across the board.
  • Investors fight to safe-haven assets, capped the greenback move, lifting the yellow metal.
  • From a technical perspective, gold stills under heavy downward pressure.

Gold (XAU/USD) trims its Tuesday’s losses, is advancing 0.05%, trading at $1,760.99 during the New York session at the time of writing. XAU/USD has been trading in a narrow range within $1,745 and $1,769. The lack of catalyst has failed to push the non-yielding metal beyond its boundaries.

The risk-off mode in the markets persists in the day. US equity markets sell-off continues, with losses between  0.38% and 1.44%. Inflationary pressures mount, with energy prices −despite retreating during the day with WTI’s trading at $77.21− threaten to derail the post-pandemic economic recovery. That issue has prompted investors to question whether the higher prices are stickier than what central bankers around the world thought. 

Further, higher yields seem to convince the market that interest rates could hike sooner rather than later, with the US 10-year bond yield sitting around 1.516%, unchanged. In the meantime, the US Dollar Index, which measures the buck’s performance against a basket of six currencies, is trimming Tuesday’s losses, advances 0.38%, currently at 94.33.

Regarding US macroeconomic data, the ADP Employment Change could prelude Friday’s Nonfarm Payrolls report. Private company hiring increased by 568K, better than the 468K foreseen, crushing analysts’ expectations.

On Thursday, the US economic docket will feature the US Initial Jobless Claims for the week ended on October 1. By Friday, the US Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls report. 

XAU/USD Price Forecast: Technical outlook

Daily chart

Gold spot price remains well below the daily moving averages (DMA’s), suggesting downside bias. During the day, the yellow metal reached a daily low at $1,745.62 but bounced off and clung to $1,760’s prices.

For gold buyers to regain control, they need a daily close above the 50-day moving average (DMA) at $1,782. Once this is achieved, the following key resistance levels would be the 200-DMA at $1,799 and the 100-DMA at $1,805.

On the flip side, if XAU/USD sellers would like to resume the downtrend, they need a daily close beneath the October 5 low, at $1,747. In case of that outcome, a move towards $1,687 is on the books. Nevertheless, there would be some hurdles on the way. The first support would be the September 29 low at $1,721, followed by  $1,700.

The Relative Strength Index (RSI) is at 47, edging slightly lower, supporting the downside bias, so another leg down might lie ahead.