Gold prices in terms of the US dollar (XAU/USD) failed to test 1100 levels and dropped sharply from 1097.77 highs on Monday on the back of strengthening US dollar following a mixed set of data flow from the US. However, the pair held comfortable above 1080 – crucial support and close the day in red at 1084.28 levels. XAU/USD remained pressured as Fed is on track to raise rates this year with markets betting on Sept lift-off.
Currently, XAU/USD bounced-off lows reached at 1081.03 in early Asia and rebounded higher only to face stiff resistance at hourly 50-SMA located at 1090.20. The pair edged higher as the US dollar remains largely subdued across the board as markets mull over the recent US fundamentals with all eyes set on Friday’s non-farm payrolls data which will only trigger fresh moves in the XAU/USD pair. As per today’s economic calendar, European session remains data-dry while the New York trading offers little in terms the only significant US factory orders.
Technicals – XAU/USD to extend range game between 1080-1105
XAU/USD once again attempts to test 1100 levels, although the recovery remains capped around 1090.80-1092 levels where the confluence of 5-DMA and 10-DMA holds. However, the daily RSI hovering around 28.50 aims sharply higher which suggest more room for upside. Hence, a break above the last will drive the pair higher towards next key resistance zone located around 1100-1101 (trend line resistance) levels.
A decisive break above 1105 – previous highs could drive the pair higher towards 1110 levels. To the downside, the crucial support at 1080 if breached could trigger fresh selling knocking-off the pair for a retest of five year lows at 1076.77. 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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