Gold prices in terms of the US dollar (XAU/USD) held on to mild gains and ended Tuesday at 1085.75 levels after a broader stabilization in commodities markets helped gold to rebound modestly. However, the pair failed to sustain above 10-DMA located at 1092.50 and retreated in the familiar range around 1085 levels, having once again tested 1080 – key levels. XAU/USD traded largely choppy with limited upside as the USD bulls jumped back into the bids following Fed’s Lockhart’s rate lift-off comments ahead of a data-crowded second half of the week.
Presently, XAU/USD prices remains at the dead center of the recent trading range ahead of crucial macro-economic data scheduled for the next couple of days. The pair is seen -0.11% lower near 1086 levels, moving in a narrow $ 5 range and below 1090 marker, as traders remain cautious ahead of series of crucial economic releases from the US including the key – ADP employment, ISM non-manufacturing PMI and trade data. ADP Employment is projected to rise by 210k, 27k below June’s 237k growth. We expect ISM non-manufacturing to tick down from 56.0 to 55.7 (consensus 56.3). While the baseline scenario going into the release of the June trade figures is that the nominal trade deficit is expected to have widened to $42.2 billion from the $41.9 billion seen in May.
Technicals – XAU/USD locked between 1080-1100 range
XAU/USD keeps moderate losses and hovers below the 10-DMA located at 1091.70, having failed an attempt to regain 5-DMA located at 1087.90. The pair faces immediate strong resistance at hourly 50-SMA and 100-SMA confluence zone located around 1088.50-1089.10. A break above which the pair could retest 10-DMA located 1091.70 levels and from there 1094.72 (Aug 4 High). Only a poor show of economic news from the US tonight could lift the XAU/USD pair above 1100 and beyond.
Conversely, a positive streak of US macro data will further boost the US currency, thereby dragging XAU/USD towards 1080 support, below which the pair is likely to retest five year lows at 1076.77 reached last month. However, its worth noting that a correction to the upside in XAU/USD cannot be ruled out in the near-term as a positive RSI-price divergence can be observed on the daily charts, signalling XAU bulls bidding up for a rebound from the five-year trough.
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