XAU/USD rebound eyes $1,780 as Evergrande woes fade ahead of Fed

Gold (XAU/USD) picks up bids to refresh intraday high around $1,765, rising for the second consecutive day, during early Tuesday.

The yellow metal dropped to the lowest since August 11 the previous day before bouncing off $1,742. The corrective pullback gains additional back-up from cautious optimism in the market of late.

Another day of Chinese traders’ absence, as well as a lack of fresh fears, could be cited as the main catalysts for the latest risk-on mood. Furthermore, comments over the United Nations meeting this week signal that the global leaders will agree on the climate change accord and could also overcome fears from Iran, due to no schedule for the direct talks, to favor the risk appetite. On the same line, US President Joe Biden’s push for partnership with the United Nations (UN) to solve the key problems as well as US House Speaker Nancy Pelosi’s hopes for a $3.5 stimulus brightens the mood too.

On the contrary, comments from the global rating agency S&P, signaling that China’s Evergrande will default join the Fed tapering woes to keep the optimists in check.

Against this backdrop, S&P 500 Futures print 0.30% intraday loss, bouncing off a two-month low whereas the US 10-year Treasury yields consolidate the latest losses around 1.31% by the press time.

Moving on, US housing market figures may entertain traders but the headlines over the Fed and China will be crucial to follow for fresh impulse ahead of the all-important Federal Reserve (Fed) monetary policy and China’s return from holidays on Wednesday.

Read: Can the Fed disrupt stock market gains, and why China’s evergrande is causing wobbles elsewhere

Technical analysis

Gold’s rebound from early August levels enables it to regain past July lows, suggesting short-term recovery towards a confluence of 10-DMA and a monthly horizontal line near $1,780.

However, bearish MACD signals hint at the seller’s dominance, which if ignored could direct the gold buyers towards the $1,800 threshold and the double tops surrounding $1,834 afterward.

In a case where the gold bulls manage to cross the $1,834 hurdle, they can aim for June’s top close to $1,917.

Meanwhile, pullback moves remain less worrisome unless staying beyond July’s low of $1,750.

Following that, a horizontal area from August 10, near $1,740-35, will precede the $1,700 round figure to lure the bears.

Gold: Daily chart

Trend: Further recovery expected