Gold Targeting $1,970 Under Short-Term Pressure

WikiFX News (1 Sept) - The U.S. dollar index slipped to a record low of 92.07 under pressure on Monday, spurring gold prices to faster growth and the attempt of $1,970.

The FED Vice Chair Clarida said that an inflation target slightly higher than 2% is appropriate as inflation expectations play a critical role in policy making. This statement indicates that the FED has determined to further stimulate the economy. Subsequently, the dollar index sank to a record low of 92.07 under pressure, while gold prices retreated modestly after being inspired to edge up and attempt the level of $1,970.

The words of Clarida are not surprising and may limit the upside room of gold prices in the near term. Markets before this Friday's Non-Farm Payrolls (NFP) release may show a tame picture of tradings, putting the brakes on the gold volatility..

According to gold hourly chart, gold prices are temporarily confined to the area of $1,972-1,976 with a pressure level which is significant in the short term of $1,976, where a breach above is necessary to pave the way for further upside. On the contrary, a failed attempt above the area may bring risks of sharp decline.

Moving forward, with another crucial zone of pressure lying in $2,000-2,002, bearish gold will be inevitably coincided with a distinct downtrend once the upside is defeated ahead of this zone; whereas if the upside claims a victory, another attempt is much more likely to be made to penetrate the earlier high of $2,015 or even higher .

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Gold Hourly Chart