Current trend

The XAU/USD pair is developing downward dynamics, updating record lows of March 10 near 1840.00. Last week, the instrument showed its strongest decline over the past few months, which was the market’s reaction to external factors.

In addition to technical reasons, pressure on gold is increasing with rising US Treasury yields. Investors are reacting to the "hawkish" rhetoric of global central banks, in particular the US Federal Reserve, expecting that the policy of high interest rates may continue this year. At the same time, it is worth noting that the American regulator is close to the projected ceiling on borrowing costs. Analytics are expecting another 25 basis point adjustment before the end of the year, after which it will be held at high restrictive levels for an extended period. Against this background, investors are redirecting their capital from gold to US Treasury bonds, the yield of which is updating multi-year highs: last Wednesday, the rate on ten-year securities for the first time since the fall of 2007 was kept at around 4.615%, having added more than 50 basis points since the beginning of the month.

The focus of investors' attention today will be September business activity statistics from the Institute for Supply Management (ISM) and S&P Global. Forecasts suggest a moderate increase in the ISM Manufacturing PMI from 47.6 points to 47.9 points, while the S&P Global PMI is expected to remain unchanged at 48.9 points. At the end of the week, the September labor market report will be presented, which could significantly influence the future rhetoric of the US Federal Reserve. Currently, analysts predict a decline in the Unemployment Rate in September from 3.8% to 3.7%, and the Nonfarm Payrolls are expected to be 158.0 thousand, which is noticeably lower than the 187.0 thousand recorded in the previous month.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is expanding but it fails to conform to the surge of "bearish" activity at the moment. MACD grows, preserving a stable buy signal (located below the signal line). Stochastic, having reached its lows, reversed into the horizontal plane, indicating risks of oversold instrument in the ultra-short term.

Resistance levels: 1850.27, 1857.49, 1869.49, 1880.00.

Support levels: 1840.00, 1828.22, 1815.00, 1800.00.

Trading tips

Short positions may be opened after a breakdown of 1840.00 with the target at 1815.00. Stop-loss — 1850.27. Implementation time: 1-2 days.

A rebound from 1840.00 as from support followed by a breakout of 1850.27 may become a signal for opening new long positions with the target at 1869.49. Stop-loss — 1840.00.