Key Ascending Trendline to Keep Gold Up in the Near-Term

Gold (XAU/USD) etched lower through the early European session on Monday and has recorded a new daily low at $1954.

The yellow metal couldn’t hold on to its bullish momentum from Friday, which shot it to its previous high around the $1977 supply region. However, the upbeat risk appetite in the equities market was the major factor weakening demand for gold’s safe-haven appeal.

The global risk sentiment was bolstered by positive Chinese Manufacturing and Services PMI data released on Monday. The data renewed hopes among investors for a strong economic recovery from the Coronavirus pandemic.

Also, a goodish bounce in the US dollar (DXY) today has applied more bearish pressure on the dollar-denominated commodity. However, last week’s dovish stance by the Fed might keep the USD bulls from becoming aggressive in the near-term, which could help the non-yielding metal consolidate or recuperate. Fed Chair Jerome Powell, at last week’s highly-anticipated Jackson Hole Symposium, announced that the central bank was considering a major policy shift to create more room for inflation to wiggle while unemployment stabilizes.

That said, traders will be looking for a strong breakout at this level before placing any aggressive bets.

Gold (XAU) Value Forecast — August 31

XAU/USD Major Bias: Sideways

Supply Levels: $1977, $1983, and $2000

Demand Levels: $1940, $1923, and $1909

Gold has reentered the $1983 – $1960 pivot/consolidation range and a break of either end of this region could precipitate a rally. Meanwhile, last week’s drop was strongly supported by the ascending trendline once again, signifying that this level is key if bears desire to take prices lower.

That said, we could see a retest of this level in the near-term, which could strongly push the price upwards.

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