Gold Remains in a Narrow Channel Despite Favorable Factors

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Gold (XAU/USD) continued on a directionless bias around the $1951 resistance in the early European session. The yellow metal ran out of steam around the $1951 level after a strong $30 overnight gain. The bounce was mainly as a result of some renewed selling around the US dollar (DXY), which usually bolsters demand for the dollar-denominated commodity.

The greenback fell across the board after a goodish pickup in the shared currency following the European Central Bank’s (ECB) expression of confidence in the economic outlook of the EU. Meanwhile, the ECB will be announcing its monetary policy decision later today. This report is expected to have some effects on the price action of the USD in the near-term and provide further directional clarity.

This together with a recent decline in the US equity futures lent further support to gold’s safe-haven appeal. The risk-off sentiment was further bolstered by a bearish tone around the US Treasury bond yields, which has been referred to as one of the key factors underpinning the non-yielding commodity.

Regardless of the numerous favorable conditions, gold remains under strong bearish pressure causing bulls to stay on the sidelines. That said, traders will be waiting to see a breakout in the short-term before taking any aggressive bet on gold, keeping in mind that some high-stake economic data are coming out of the US later today.

Gold (XAU) Value Forecast — September 10

XAU/USD Major Bias: Sideways

Supply Levels: $1951, $1960, and $1983

Demand Levels: $1940, $1923, and $1906

XAU/USD has been in a narrow range between $1951 to $1943 for the past 24-hours. The yellow metal remains in a battle with the long-lasting ascending trendline. A. break above that line could propel the commodity to the $1960 pivot zone. However, failure to climb higher in the near-term could induce a sharp retrace.

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