Gold price forecast: Who’s up for a buy trade over $1,754?

Despite the various negative headlines, the price of the yellow metal failed to extend its previous three-day upward rally, turning sour around the $1,760 level, amid a stronger US dollar and a riskier market sentiment. Today, during the Asian trading session, the gold price failed to extend its upward trend, becoming depressed around the $1,760 level, as the US dollar gathered upside momentum on the day.

The US Dollar Index climbed from the lower levels to an intra-day high of around 94.00, making gold cheaper for holders of other currencies. Thus, the bullish bias in the US dollar was seen as one of the key factors that put some selling pressure on the dollar-denominated commodity, gold. In addition to this, the global equity markets have been flashing green since the day started, which tends to undermine the safe-haven metal prices. The risk sentiment was backed by the renewed hopes surrounding the US stimulus package.

Meanwhile, Japan’s new PM, Fumio Kishida, warmly welcomes global leaders, which indicates progressive tie-ups, as the global giants overcome the pandemic with faster jabbing rates. Peviously released economic data also increased optimism about the recovery of the US economy, which positively impacted the market trading sentiment. On the data front, US New Factory Orders came in above the forecasts, surging by 1.2% in August, which is well above the market forecast of a 1% rise. The positive appearance of US stock futures highlights the risk-on sentiment, which tends to undermine the safe-haven metal, GOLD.

Despite the risk-on market mood, the broad-based US dollar maintained its early-day upward rally and remained well bid on the day. The US Dollar Index surged from the lower levels and stood strong near 94.00. The higher US 10-year benchmark Treasury Yields added to the upward pressure on the USD prices, which rose two basis points to 1.48%, after testing a high of 1.56% in June. In the meantime, the previously released upbeat US data also played a significant role in supporting the US currency. The rise in the value of the greenback kept bullion prices under pressure, as the price of the XAU/USD is inversely related to the value of the US dollar.

The long-lasting US-China tensions also got an additional lift after the US condemned Chinese activity near Taiwan. The remarks by US Trade Representative (USTR) Katherine Tai, who cited Beijing’s shortfall in meeting the phase one deal targets, also added to the drama. The suspension of trading in Evergrande stock in Hong Kong has fueled speculation that the bankrupt real estate firm is being sold to pay off debts.

Gold has been trading at $1,756 per ounce on Tuesday, with a bearish bias. It is currently receiving immediate support at the 1,754 mark, which has been prolonged by an intraday pivot point. Gold breached the pivot point support mark of 1,762, exposing it to the 1,754 support level.

On the downside, a breakthrough at the 1,754 level would open the precious metal to levels of  1,747 and 1,739. On the downside, a break at 1,739 would expose gold to the 1,731 level on the downside. On a positive note, the next resistance level for gold remains at 1,762, and a break at this level would open the precious metal up to the 1,770 level. The RSI and stochastic both support a selling trend in GOLD; therefore, a bearish bias prevails below 1,762 and vice versa.