Gold Price Forecast: XAU/USD tweaks three-day fall above $1,800 on softer USD
- Gold consolidates weekly losses during first positive day in four, picks up bids of late.
- Market’s indecision amid covid woes, stimulus deadlock and pre-data anxiety weigh on the US dollar.
- Wall Street closed positive on upbeat earnings, growth expectations but stock futures stay mildly offered, Treasury yield remain steady.
- Gold Weekly Forecast: XAU/USD bulls hesitate as focus shift to NFP
Gold (XAU/USD) snaps a three-day downtrend, up 0.14% intraday near $1,813, as European traders brace for Wednesday’s work. In doing so, the yellow metal benefits from the downbeat US dollar but the commodity buyers remain cautious ahead of the day’s key data, namely US ISM Services PMI and ADP Employment Change.
That said, the US Dollar Index (DXY) drops the most in the week, down 0.05% on a day near 92.00, by the press time.
Although the previous day’s strong Factory Orders and hawkish Fedspeak tried to recall the greenback bulls, the fresh covid fears at home and the Senate deadlock over stimulus tested the USD bulls on Tuesday. Also weighing on the US currency was the upbeat closing of Wall Street amid strong earnings and growth expectations.
Though, the US Centres for Disease Control and Prevention’s (CDC) temporary moratorium, expiring on October 03, after noting the heaviest jump in infections since February exert additional downside pressure on the USD afterward. Also challenging the greenback, favoring gold prices, was the market’s cautious mood before the early signal for Friday’s Nonfarm Payrolls.
It should be noted that the coronavirus numbers from Japan, India, China and Australia were also worrisome while the UK’s infection slowed down of late.
Amid these plays, US stock futures and Asia-Pacific shares remain mildly offered whereas the US 10-year Treasury yields remain steady around 1.18%.
Given the mixed sentiment and the US dollar weakness, gold prices may keep the recent recovery prior to the US data.
ISM Services PMI for July, expected 60.4 versus 60.1, coupled with the ADP Employment Change for the said month, market consensus 695K versus 692K prior, will be the key data to watch. Additionally, covid headlines and stimulus news, not to forget geopolitical updates concerning Iran and China, can also entertain gold traders.
Technical analysis
Gold extends rebound from 50-SMA amid gradually improving RSI conditions and receding bearish bias of the MACD histogram, suggesting further advances targeting July 25 high near $1,825.
However, double-top formation near $1,832-34 becomes a tough nut to crack for the metal buyers, which if crossed won’t hesitate to challenge late May’s low near $1,872.
During the rise, early June’s bottom surrounding $1,856 may offer an intermediate halt.
Alternatively, a downside break of 50-SMA, near $1,809, will be challenged by an ascending support line from June 29, close to $1,801, as well as the $1,800 round figure.
Overall, gold buyers remain unconvinced below $1,834 but intermediate consolidation can’t be ruled out.
Gold: Four-hour chart
Trend: Further upside expected