XAU/USD pair
Gold prices in terms of US dollar (XAU/USD) breached the crucial 1100 – psychological levels as anticipated on Wednesday but failed to resist 1100 levels and retraced to 1097.56 levels on close. XAU/USD extended its broader downtrend within a bearish pennant in the making, although remained supported as the FOMC statement turned out to be dovish. However the gains were capped as the Fed still remains on track to hike rates this year.
A for today’s trade so far, XAU/USD witnessed sharp losses and dropped nearly $ 16 as the USD bulls continue to dominate against all its major counterparts and dollar-backed following Wednesday FOMC statement. Changes to the FOMC statement were fairly minimal, with no clear new signal on when exactly the policy normalization process will begin, but September is still on the table for “lift-off” if the data comes in strong. At the moment, XAU/USD trades around 1085.70 levels and remains heavy ahead of key US data releases including US Q2 GDP figures due later in the New York session. The market expects to see a 2.5% rebound in the US economic growth in the second quarter.
Technically, on daily charts, the pair has given an inverted/bear pennant breakout today accompanied by high volumes which indicates further southwards moves likely. If the US growth figures show a rebound as expected we could see XAU/USD retesting five-year lows reached at 1076.77 on July 24. Below which floors open for a test of 1070-1065 – early 2010 levels. In case the data disappoints or comes in line with expectations; XAU/USD could see tepid recovery towards daily highs at 1098.70, beyond which the pattern resistance at 1100 levels lie.
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