#XAUUSD @ 1726.55 Gold gains strong positive traction on Friday amid aggressive USD long-unwinding trade. (Pivot Orderbook analysis)

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• Gold gains strong positive traction on Friday amid aggressive USD long-unwinding trade.
• Aggressive Fed rate hike bets, elevated US bond yields should help limit the USD losses.
• The risk-on impulse could further contribute to capping the safe-haven precious metal.

The pair currently trades last at 1726.55.

The previous day high was 1728.27 while the previous day low was 1704.01. The daily 38.2% Fib levels comes at 1713.28, expected to provide support. Similarly, the daily 61.8% fib level is at 1719.0, expected to provide support.

Gold attracts fresh buying on the last day of the week and climbs to a nearly two-week high during the early part of the European session. The XAU/USD is currently placed just below the $1,730 level and is looking to build on its recent bounce from the lowest level since July 21 touched last week.

The US dollar comes under heavy selling pressure on Friday and retreats further from a two-decade high, which turns out to be a key factor boosting demand for the dollar-denominated commodity. The steep USD downfall to a fresh monthly low could be solely attributed to some long-unwinding and is more likely to remain limited amid hawkish Fed expectations.

In fact, the US central bank is anticipated to tighten its monetary policy at a faster pace to tame inflation and the bets were reaffirmed by Fed Chair Jerome Powell on Thursday. Speaking at a Cato Institute conference, Powell reiterated the central bank’s strong commitment to bringing inflation down and added that the Fed needs to keep going until it gets the job done.

Powell’s remarks reaffirmed market bets for a supersized 75 bps rate hike at the next FOMC meeting on September 20-21. This remains supportive of elevated US Treasury bond yields, which should help limit any meaningful USD corrective slide. Moreover, other major central banks, except the Bank of Japan, have also maintained a more hawkish bias.

Apart from this, the risk-on impulse – as depicted by a generally positive tone around the equity markets – might further contribute to capping the upside for the safe-haven metal. This, in turn, warrants some caution for aggressive bulls. Nevertheless, gold remains on track to register weekly gains and snap a three-week losing streak.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1727.81 at the time of writing. Pair opened at 1708.45 and is trading with a change of 1.13 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1739.05, 50 SMA 1745.74, 100 SMA @ 1797.82 and 200 SMA @ 1833.8.

The previous day high was 1728.27 while the previous day low was 1704.01. The daily 38.2% Fib levels comes at 1713.28, expected to provide support. Similarly, the daily 61.8% fib level is at 1719.0, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1698.88, 1689.32, 1674.62
• Pivot resistance is noted at 1723.14, 1737.84, 1747.4

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