Daily Market Recap – Gold prices retreat below key resistance at 1,834

The price of gold has been under pressure since the beginning of the week after rising to a one-month high of 1,834 per ounce.

This decline can be explained by a rebound of the dollar after falling to a low of more than a month last week following disappointing U.S. economic statistics that call into question the Fed's tapering outlook.

Indeed, several sets of statistics came in below expectations in recent weeks, including the monthly jobs report, which showed only 235,000 jobs created in August, versus 750,000 expected.

In addition to the rebound in the dollar, the gold price is also under pressure due to the rise in real rates for nearly a month. The real yield on the US 10-year Treasury bond rose from a low of -1.19% on August 3 to -0.98% on September 6, improving the attractiveness of the US bond market and thus putting pressure on alternative “safe haven” assets like gold.

The JOLTS jobs report and the Fed's Beige Book released on Wednesday are expected to be particularly important for investors' outlook on the economy, the Fed's monetary policy, and thus the financial markets. A Beige Book showing an overheating economy would fuel the tapering outlook, while a report showing slowing domestic demand would further discount the tapering outlook.

From a technical perspective, gold is retreating from a key resistance at 1,834 correspondings to the early July high below which gold had already retreated in late July. Although the trend is short-term bullish, the risk/reward ratio does not favor buying strategies below this resistance. It will be preferable to wait for a breakout or a retracement before looking to buy.

The risk/reward ratio is currently in favor of sellers. A pullback below Friday's low of about 1,808 would pave the way for a retracement of the recent bullish rally. A return to the pivot at 1,755 would then be expected in the short term.

 (Chart Source: Tradingview 07.09.2021)

If the price rebounds and breaks above the resistance at 1,834, the outlook would be bullish again in the short term and a return to the June high at 1,916 could be expected.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.