Gold Price Forecast: XAU/USD stays defensive above $1,700, US ISM Services PMI, full markets eyed
- Gold price treads water after beginning the key week on softer footing.
- European energy crisis, US-China tussles weigh on sentiment but US holiday restricts market moves.
- Fears of recession, hawkish Fed bets underpin DXY strength.
- US ISM Services PMI for August, US traders’ reaction to latest developments awaited.
Gold price (XAU/USD) remains sidelined around $1,710, defensive after a softer start to the week, as traders await the key US data, as well as the return of the full markets on Tuesday. That said, the yellow metal’s losses could be linked to the escalating recession fears in Europe and the increasing tension between the US and China, not to forget fears of aggressive rates hikes by the US Federal Reserve (Fed).
Russia’s halting of energy supplies to European worsened the situation for the old continent after it joined the other Group of Seven (G7) leaders to announce a price cap of Moscow’s oil. Also adding to the European energy crisis were dimming hopes of the US-Iran oil deal and the output cut from the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+.
Elsewhere, the US-China tussles over the trade deal and Taiwan escalated on Monday as the Biden Administration announced intention to continue with the Trump-era tariffs for now. These tariffs were examined for removal and signalled the likely improvement in the relations previously.
Further, the US push to sale arms to Taiwan and Taipei’s no-visa entry for some of its friendly country residents, including the US, teased Beijing to utter harsh words and increase the tussles.
Amid these plays, European equities were lower and the bond yields were firmer while the US Dollar Index (DXY) refreshed 20-year high.
Technical analysis
Gold price seesaws inside a two-day-old symmetrical triangle as traders await the return of the full markets.
In addition to the triangle area between $1,709 and $1,715, the 50-HMA and the 200-HMA also restrict short-term XAU/USD moves around $1,707 and $1,727 in that order.
It’s worth noting, however, that the bearish MACD signals and the commodity’s pullback from the 38.2% Fibonacci retracement of August 25 to September 01 downturn, around $1,718, also keep sellers hopeful.
That said, a downside break of the $1,707 support comprising the 50-HMA won’t hesitate to drag the quote towards the monthly low near $1,688 before highlighting the yearly bottom marked in July, near $1,680.
Meanwhile, recovery remains elusive until crossing the 200-HMA hurdle near $1,727, a break of which could propel the XAU/USD buyers towards the August-end swing high near $1,745.
Overall, gold bears are in control but the room towards the south is limited.
Gold: Hourly chart
Trend: Further weakness expected