Gold settled in the green zone on October 7 despite failing multiple times to regain the $1,900 mark. The precious metal benefited from broad-based US dollar weakness, inspired by the market optimism about a potential US stimulus and dovish FOMC minutes.
The house speaker Nancy Pelosi highlighted readiness to an airline-support aid in extensive talks with Treasury Secretary Steven Mnuchin after President Trump suspended stimulus negotiations late Tuesday. But, the upward movement in the non-yielding gold remained significantly limited by the risk-on rally that happened on Wall Street.
For now, the markets seem to look forward to the United States Jobless Claims data scheduled for release on October 8 for the fresh updates on the US economic recovery coupled with risk sentiment. Meanwhile, gold appears like it will continue to trade on the defensive amid an uptick in the US stock futures.
Any downside movement might be cushioned by widespread dollar weakness. The markets shrug-off a dismal although civilized US Vice Presidential debate held earlier this morning in the Asian session.
As it is evident from the hourly chart, spot gold is teasing a symmetrical triangle breakdown while it flirts with the rising trendline support that is located at $1885. If a bearish breakdown is to be confirmed, gold may drop towards the critical support level located at $1,860, the pattern target.
Currently, the hourly Relative Strength Index (RSI) trends are oscillating in the bearish zone. That scenario somehow backs the case for more declines. Nonetheless, today’s low of $1873 may challenge the bears’ commitment.
On the other hand, recapturing the 21-Hourly Moving Average (HMA) that is located at $1887 on a sustainable basis is important to take on the next huge resistance that has formed at $1893. This is the confluence level of the 50 and 200-HMAs. Further upwards, the $1900 level might come back in play.