Gold capitalized on the modest bearish pressure that surrounds the US dollar. The precious yellow metal advanced to a daily high of $1,767 in the European session before losing ground. At the time of publication, XAU/USD is down 0.35% on the daily charts trading charts hovering around $1,755.
With high-impact data releases absent, the fluctuations of the US Treasury bond yields appear to be affecting the US dollar’s market valuation. The US Dollar Index touched a daily low of 94.08 and it was last seen flat on the day trading at 94.20 supported by a 1% increase seen within the 10-year US Treasury bond yield benchmark.
Earlier in the day, the data published by the United States Department of Labour announced on Thursday that there were 326,000 Initial Jobless Claims in the week that ended on October 2, compared to the analysts’ estimate of 350,000.
In the meantime, the US stock index futures are up by around 0.9% to 1.1% on the day on renewed hopes of US legislators finding a temporary solution to the debt limit crisis. If Wall Street’s main indexes posted strong gains after the opening bell, the dollar may struggle to continue to gather some strength.
Nonetheless, gold’s upside may remain capped with the T-bond yields remaining afloat in the positive territory. Later in the day, Consumer Credit Change data will feature in the United States economic docket that is likely to get ignored ahead of tomorrow’s September jobs report.
Gold Technical Analysis
On the four-hour chart, the Relative Strength Index (RSI) indicator dropped below 50. It indicates that the buyers are now struggling to remain in control of gold’s action in the short term.
The initial support is situated at $1,750 (50-period SMA) while the next is located at $1,745 (static level). A daily close below $1,745 may open the door for extra losses toward the next static support located at $1,730.
On the flip side, strong resistance appears to have formed around $1,770. In case the buyers manage to turn that level into support, the 200-period SMA may be seen as the next target on the upside.