XAU/USD Current price: $1,875.73
- Concerns about a US government shutdown coupled with fears of an upcoming recession.
- The yield on the 10-year Treasury note surged to a fresh multi-year high of 4.59%.
- XAU/UD pressures fresh multi-week lows and aims to extend its slump in the near term.
Spot Gold accelerated its slump after losing the $1,900 mark, as the US Dollar soared in a risk-averse environment. XAU/USD trade below $1,880 at levels last seen in March this year as financial markets monitor United States (US) developments. The country is on the brink of a federal shutdown after House Republicans rejected a bipartisan bill advancing in the Senate. If Congress disagrees on funding, millions of federal employees will be furloughed starting next Saturday.
Meanwhile, stock markets extend their bearish routes amid concerns central banks will maintain rates higher for longer, which increases the risks of economic downturns. Government bond yields soared, with the 10-year Treasury note yielding as much as 4.59%, its highest in over fifteen years. The 2-year note, in the meantime, offers 5.11%, not far from the multi-year peak of 5.20% posted after the Federal Reserve (Fed) monetary policy announcement.
XAU/USD short-term technical outlook
XAU/USD trades at fresh intraday lows mid-US session, and technical readings in the daily chart suggest sellers are far from done. The bright metal plummeted below all its moving averages, with the 20 SMA finally accelerating south below the longer ones. At the same time, technical indicators head firmly south, well below their midlines, in line with a continued slide. The August monthly low at $1,884.70 is now the immediate support level.
In the near term, and according to the 4-hour chart, XAU/USD is extremely oversold yet without signs of changing course. Technical indicators head south at extreme levels, with the Relative Strength Index (RSI) indicator currently at 15. At the same time, Gold develops roughly $35 below a sharply bearish 20 SMA, which dips below also bearish longer ones.
Support levels: 1,871.50 1,8589.30 1,845.20
Resistance levels: 1,884.70 1,901.00 1,912.70