Sharp reversal in gold shows recovery is not an easy road
Gold turned to the downside again after approaching the $1730 area and pulled back sharply toward $1710, erasing daily gains on Friday. The stabilization of the US Dollar and a rebound in yields weighed on the yellow metal. XAUUSD failed to break the critical resistance around $1730 and weakened. A break above would strengthen the outlook for gold, targeting first $1745 and then exposing a downtrend line at $1760. On the flip side, a daily close below $1695 would expose the long-term support area at $1675 (2021 and 2022 lows).
The greenback moved off lows, with the DXY rising back toward 109.00 and the US 10-year yield recovering 3.30%. Those moves, made the barrier around $1730 in gold stronger. Not even the better tone in Wall Street capped the retreat. XAUUSD found support at $1710$ and it is about to end the week hovering around $1715, below key resistance levels but also holding above $1700. On Thursday, Fed Chair Powell continued with the hawkish tone. Next week, the key number will be August US CPI on Tuesday. If market participants see in the numbers that a peak has been reach, gold could benefit.