XAU/USD bulls take on the psychological $1,750 level

• Gold consolidates the biggest daily losses in a week near early August levels.
• Risk appetite improves on Evergrande news, post-Fed rethink and vaccine/stimulus optimism.
• US Treasury yields should be watched carefully with eyes on China, second-tier data.
• Gold Price Forecast: Risk-on weighs on the bright metal

Gold update: Gold (XAU/USD) is bid on Friday and taking on the $1,750 psychological level in recent trade. The correction of the daily bearish impulse could be headed for a test of the Fibonacci scale and the 38.2% ratio will be key near $1,756. Higher up, the golden 61.8% ratio is located at $1,768 and it will have a confluence with the 20-day EMA. Resistance there could result in a build-up for a downside continuation next week. 

However, the fundamentals are supporting a risk-on approach in markets with investors buying into the Federal Reserve optimistic economic outlook. With that being said, the Evergande situation is fluid and will be a risk going forward. 

Evergrande has resolved one coupon payment on a Shenzhen-traded bond but was due to pay $83.5 million in interest on a $2 billion offshore bond on Thursday and also has a $47.5 million dollar-bond interest payment next week. There is a 30-day window to arrange the payments for which the company says it endeavours to settle. 

”Evergrande Chairman Hui Ka Yan urged his executives late on Wednesday to ensure the delivery of quality properties and the redemption of its wealth management products, which are typically held by millions of retail investors in China,” Reuters reported. 

End of update

Gold (XAU/USD) bears take a breather around a six-week low, picking up bids to $1,744 during the early Asian session on Friday.

The yellow metal dropped the most in a week the previous day after the US 10-year Treasury yields printed the biggest daily jump in seven months, around 1.43% by the press time.

After an initially downbeat reaction to the US Federal Reserve’s (Fed) stint, the US bond yields rallied as traders reassessed the hawkish phenomenon of the US central banker. That said, the Fed left benchmark rates unchanged near 0.25% at the latest meeting but signaled rate hikes and tapering more seriously.

Elsewhere, fading fears that China’s struggled real-estate firm Evergrande is a serious threat to the economy plays a key role. The firm got restructuring plans and showed readiness to pay a scheduled coupon while also gained government support to lift the sentiment.

It’s worth noting that progressing talks over the US $3.5 trillion stimulus and vaccine optimism adds to the risk-on mood.

That said, Wall Street portrayed a rosy picture of the market sentiment while the S&P 500 Futures rise 0.10% at the latest.

It should be observed that softer prints of the US preliminary PMI readings for September couldn’t recall gold buyers, neither did the US Dollar Index (DXY) slump on Thursday, the biggest in a month.

Moving on, gold traders…