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Gold Price Forecast: XAU/USD nosedives to the lowest level since August 13

Gold witnessed aggressive selling for the second successive day amid resurgent USD demand. The USD buying interest picked up pace…

By financial2020myday , in Forex , at September 16, 2021

Gold witnessed aggressive selling for the second successive day amid resurgent USD demand.
The USD buying interest picked up pace following the release of mostly upbeat US macro data.
Technical selling below the $1,780 horizontal support further aggravated the bearish pressure.
Gold Price Forecast: Break below $1,780 will shift the bias back in favour of XAU/USD bears
Gold continued losing ground through the early North American session and dived to the lowest level since August 13, further below the $1760 region post-US macro releases. The US dollar bulls cheered a surprisingly strong August Retail Sales report, which, in turn, weighed heavily on the dollar-denominated commodity. According to the official data, the headline Retail Sales smashed consensus estimates and increased 0.7% MoM in August. Adding to this, sales excluding autos recorded a much stronger growth and came in at 1.8%, further underscoring consumer confidence.

Separately, the Philly Fed Manufacturing Index unexpectedly jumped to 30.7 in September from 19.4 in the previous month. This, to a larger extent, helped offset a slight disappointment from Initial Weekly Jobless Claims, which rose from a pandemic-era low of 312K to 332K during the week ended September 10. Nevertheless, the data pointed to the continuation of economic recovery and reaffirmed expectations about an imminent Fed taper announcement later this year. This was evident from a sharp spike in the US Treasury bond yields, which further drove flows away from the non-yielding yellow metal.
Apart from this, the underlying bullish sentiment in the financial markets was seen as another factor that exerted additional pressure on the safe-haven gold. The sharp downfall took along some short-term trading stops placed near the previous monthly swing lows, around the $1,780 horizontal zone. This further aggravated the intraday bearish pressure and might have already set the stage for further losses. Hence, a subsequent fall towards testing the next relevant support, near the $1,750 region, remains a distinct possibility. That said, RSI (14) on hourly charts is already flashing extremely oversold conditions and warrants some caution for aggressive bearish traders.

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