Gold prices in terms of the US dollar (XAU/USD) bounced-off sharply from the key support at 1080 levels on Friday and swung back higher above 1100 marker after the greenback weakened following the US Q2 Employment Cost Index (ECI) data which recorded its slowest quarterly pace of growth in three decades. However, the pair failed to resist 1100 levels and retraced to 1093.77 at close.
Currently, XAU/USD struggles ahead of Europe open and remains in a narrow range with the gains capped by a minor rebound seen in the US dollar after Friday’s US ECI data-backed steep losses. Looking ahead, this week holds an avalanche of key US economic news which will have major impact on the USD moves and thereby set the direction for the XAU/USD pair. Later today, the Institute for Supply Management (ISM) and final July surveys for manufacturing will be published in the New York session. The former is expected to remain unchanged at a five-month high of 53.5. Moreover, the PCE inflation gauge will also be published and to remain unchanged at 0.1%.
Technically, on daily charts, XAU/USD extends further in the inverted pennant formation and faces stiff resistance at the pattern resistance located at 1102.10 levels. Hence, a decisive break above the last will drive the pair higher towards next resistance zone located around 1105-1106 levels. Only a break above 1109.93 (July 21 High) could negate the near term downside bias. However, a break below the daily lows at 1091.97 could drag the pair lower for a retest of the trend line support located at 1087.42, below which 1080-key support may be retested.
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