- Gold, rejected at $1,800, retreats to levels below $1,770.
- Risk appetite and higher US bonds have hit gold futures.
- XAU/USD’s bearish momentum might increase below $1,745.
Gold futures have dropped sharply on Friday, hurt by a combination of factors that have boosted appetite for risk. The yellow metal has depreciated more than $30 after having topped at $1,800 on Thursday, to find supporet right below $1,770 during the afternoon US trading session.
Upbeat data and a rebound of US yields have weighed on gold
Bullion has given away Thursday’s gains, amid a risk rally and a rebound on US T-Bond yields, which have dented the appeal of the safe-haven metal. The upbeat quarterly results on the financial sector, with Goldman Sachs reporting a 66% increase on earnings in the third quarter to conclude a string of better than expected readings on other major banks earlier this week, have boosted investors’ optimism and easing fears about inflationary pressures and supply chain disruptions.
On the other hand, long-term US T-Bond yields have bounced up, with the 10-year bond, which had dropped from the 1.61% top hit on Monday, to 1.51% on Thursday, has picked up to 1.55% on Friday, curbing attractive for gold, further.
The macroeconomic calendar has not been of any particular help for gold buyers either. The US retail sales have increased by 0.7% in September, according to data released by the Commerce Department on Friday, beating market expectations of a 0.4% increment, although partially due to higher prices, namely in auto dealers who are struggling with a global shortage of computer chips.
XAU/USD: Breach of 1.745 support might accelerate the decline
From a technical perspective, XAU/USD seems to have found buyers at $1.770 area to take a breather after a 1.8% reversal. Below here, the next potential support area lies at $1,745 (October 6 low) which would open the path towards a key support area at $1,725 (September 29, 30 low).
On the upside, resistance levels remain at $1,807 (Sept. 15 high) ahead of $1.830, July and September’s peak. If that level is surpassed, the next potential target might be June 8 and 11 highs at $1,905.
Technical levels to watch