Gold Plunges to New 6-Week Lows on Weak US Markit PMIs

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The gold price on Thursday plummeted to trade at a new 6-week low of about $1,740 following the latest round of US data. The price of the yellow metal continues to trade within a descending channel formation in the 60-min chart.

Gold has now dropped several levels below the 100-hour moving average following Thursday’s plunge. It has also slipped to the oversold conditions, creating a perfect opportunity for a rebound.

Gold Price Fundamental Overview

From a fundamental perspective, the yellow metal is trading a the back of a relatively busy period in the US market. On Thursday, the preliminary Markit Manufacturing PMI for September missed the expectation of 61.5 with 60.5. The Markit Services PMI also came short of 55 with 54.4 while the PMI Composite missed 58.3 with 54.5. On the other hand, the initial jobless claims for the week ending September 17 missed the expectation of 320k with a claim count of 351k, while continuing claims for the preceding week came in higher with a tally of 2.845 million compared to an expectation of 2.65 million.

Earlier in the week, the Federal Reserve Committee decided to keep the Funds rate unchanged at 0.25%, while existing home sales for August slightly missed the ex[ected (MoM) tally of 5.89 million with 5.88 million. Elsewhere, building permits and housing starts for the period outperformed expectations on Tuesday.

Gold Price Technical Analysis (the 60-min Chart)

Technically, the yellow metal seems to be trading within a descending channel formation in the 60-min chart. It has recently plummeted to slip to the oversold conditions of the 14-hour RSI. This indicates a significant short-term bearish bias in the market sentiment.

Therefore, the bears will be looking to extend the current pullback towards $1,732 or lower to $1,718. On the other hand, the bulls will target potential short-term rebound at $1,754 or higher at $1,765.

Gold Price Technical Analysis (the Daily Chart)

In the daily chart, the XAU/USD seems to be trading within a gently sloping channel formation. It has recently dropped to fall below the 100-day moving average. However, it is yet to reach the oversold conditions of the 14-day RSI.

Therefore, the bulls will be targeting potential rebound profits at around $1,782 or higher at $1,820. On the other hand, the bears will target extended long-term declines at $1,702 or lower at $1,662.

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