Gold Exhibits Mild Bullish Strength Despite Risk-On Sentiment Across Markets

Gold (XAU/USD) etched lower through the Asian session on Monday and renewed its daily lows around $1887. However, it is beginning to show some bullish strength in the early European session. 

The yellow metal extended its decline from Friday’s eight-day high around $1917. The decline was sparked by the risk-on sentiment across markets, which tends to diminish demand for traditional safe-haven assets like gold. 

The global risk sentiment was bolstered after positive news concerning President Trump’s Coronavirus infection came out. The President’s doctors stated that he was responding well to treatments and could return to the White House today. This report eased most of the political tensions that sparked a risk-flight reaction in investors last week. 

The risk-on sentiment was further reinvigorated by a goodish pickup in the US Treasury bond yields, which has exerted additional pressure on the non-yielding commodity. However, a limited US dollar (DXY) price action has helped prevent significant losses for the dollar-denominated asset. 

Moving on, market participants will be looking at the US economic docked today—which features the release of the ISM Non-Manufacturing PMI—for clues. This, coupled with the risk sentiment across markets and the USD price dynamics, will dictate price action for gold as investors seek short-term trading opportunities. 

Gold (XAU) Value Forecast — October 5

XAU/USD Major Bias: Bullish

Supply Levels: $1917, $1923, and $1939

Demand Levels: $1890, $1882, and $1849

Gold appears to be waxing stronger in recent hours, following its steep decline in the Asian session. The commodity is now battling the $1900 barrier and is trading at $1901 at press time. Apart from being a strong psychological level, the $1900 is also where our hourly 50 SMA lies, making that level very crucial for gold in the near-term. 

Meanwhile, gold has been trading within an expanding channel for some days now, and we have just clipped the down end of this channel, where we got a good bounce. That said, we’re likely going to see a bullish continuation to the $1917 October high and, subsequently, the $1923 where the top end of the channel is. 

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