Gold recovers after flirting with $3,820

Gold remains on the back foot, although it manages well to bounce off the daily contention area around $3,820 per troy ounce. The yellow metal’s daily pullback comes largely in response to the decent bounce in the Greenback along with mixed US yields across the curve, all amid US government shutdown concerns.

XAU/USD Technical Overview 

From a technical point of view, the daily chart shows that the XAU/USD pair slide is a mere correction. The bright metal keeps trading far above all its moving averages, with a bullish 20 Simple Moving Average (SMA) currently at around $3,712. Technical indicators have turned lower but remain above their midlines. In fact, the Relative Strength Index (RSI) edged marginally, yet at 76, still within overbought levels.

The near-term picture shows the correction may continue. In the 4-hour chart, the XAU/USD pair is currently below a flat 20 SMA, which stands in the $3,850 price zone. The 100 and 200 SMAs keep heading north, far below the current level, limiting the bearish potential of the pair. Finally, technical indicators have lost their downward strength and settled above their midlines, also hinting at the absence of relevant selling interest.

Support levels: 3,837.60 3,819.20 3,807.05

Resistance levels: 3,861.60 3,878.45 3,896.00

Fundamental Overview

Gold price stood as high as $3,896.60 a troy ounce on Thursday, clinching yet another record high. The bright metal, however, retreated sharply after Wall Street’s opening and flirted with the $3,820 level.

The US Dollar (USD) traded uneventfully throughout the first half of the day, with most major pairs, including XAU/USD, stuck to limited ranges. Things take a turn for the worse after American traders reach their desks.

The United States (US) Government shutdown-related concerns finally seem to have kicked in: US indexes turned sharply lower while the USD recovered its safe-haven condition early in the American session. After the initial hours of trading, the market settled, and the XAU/USD pair managed to trim some losses, currently hovering around $3,845.

Hawkish comments from the US Federal Reserve (Fed) Bank of Dallas President Lorie Logan add to the Greenback’s momentum. Logan urged caution on interest rate cuts, citing inflation is running above target and trending higher. Furthermore, Logan noted that the labor market is “only gradually slowing,” and that it remains “fairly balanced,” despite recent discouraging data.

Other than that, the US suspended the release of Initial Jobless Claims and Factory Orders. The Nonfarm Payroll (NFP) report, scheduled for Friday, will not be published, although ISM will release the September Services Purchasing Managers’ Index (PMI). The services business index is expected to print at 51.7, easing from the 52 posted in August.