By Barani Krishnan
Investing.com - Gold rose almost 1% on Monday, its first decent pop in almost a week, as the dollar clambered down from two-month highs.
Notwithstanding the bounce, the advice from chartists and other gold watchers was the same: “Don’t get too excited.”
“There has been a good retracement in the greenback at the start of the week,” Rajan Dhall, who charts hourly moves in the yellow metal, said in a post on FX Street.
“The (gold) price seems to have found some support at $1,850 per troy ounce. There are now some key levels of resistance where the price bounced in the past. Don't get too excited there are still some key levels to break.”
Gold had its worst week in six months last week, losing almost 5%, after a knockout punch from the dollar which again proved to be champ in the latest round of global risk aversion.
In Monday’s trade, spot gold, which reflects real-time trades in bullion, was up $16.97, or 0.9%, at $1,879.37 by 3:32 PM ET (19:32 GMT), after a session high earlier at $1,883.02.
On the futures side, U.S. gold for December delivery settled up $16, or 0.9%, at $1,882.30 per ounce.
The Dollar Index, or DX, which tracks the greenback’s performance versus six currencies, was off 0.4% at 94.317, after a two-month high of 94.795 on Friday. The DX is still up 2.4% for September, accounting for its best return in 14 months.
The path for both DX and gold this week will likely be influenced by Tuesday’s election debate between President Donald Trump and his challenger Joe Biden, and Friday’s U.S. jobs numbers.
Both the dollar and gold — depending which one investors see as a better hedge against election uncertainty — have a chance to rally if Biden, who is leading in polls numbers for the election, performs well at the debate.
The greenback could also shoot higher if nonfarm-payrolls for August come in greater than the 850,000 additions forecast after July’s jobs growth of 1.37 million.
“The two big risks for gold are a COVID vaccine and a close election that keeps markets on suspense as to when we will find out who won and if it will be a contested election,” said Ed Moya, a macro analyst at OANDA in New York. “The path higher will be messy, but gold should start attracting value investors now.”