Gold Price Forecast: XAU/USD extends rally on broad US Dollar sell-off

Valeria Bednarik FXStreet

XAU/USD Current price: $1,938.00

United States job openings unexpectedly shrunk to 8.82 million in July.
Market players lift bets on an on-hold Federal Reserve next September.
XAU/USD trades at a fresh three-week high and aims for another leg north.

XAU/USD changed course on Tuesday, soaring to $1,938.08 a troy ounce following the release of United States (US) macroeconomic figures suggesting the end of the monetary tightening cycle. The US Dollar plummeted after the US Bureau of Labor Statistics (BLS) reported that the number of job openings on the last business day of July stood at 8.82 million, well below the previous 9.16 and below the 9.46 million expected. It was also the lowest reading since March 2021 and a firmer sign of a loosening labour market.

Furthermore, Consumer Confidence contracted to 106.1 in August from 114.0 in July, according to the Conference Board (CB) estimate, suggesting cooling household demand. Financial markets are pricing in 86.5% chances the Federal Reserve (Fed) will keep rates on hold in the September meeting, while the odds for a 25 basis points (bps) hike in November stand at 44.5%, down from 50.9% before data.

Stock markets welcomed the news, with Wall Street rallying to fresh weekly highs. Treasury bond yields turned south, with the 10-year note now yielding 4.12%, down 8 bps, and the 2-year note offering 4.88%, down 12 bps.

XAU/USD price short-term technical outlook

XAU/USD holds on to gains and trades above the 50% Fibonacci retracement of the $1,982.12/$1,884.77 sump at $1,933.30, the immediate support level. Technical readings in the daily chart support an upward extension, as technical indicators maintain their upward slopes within positive levels while anticipating another leg north. At the same time, Gold advances above the 20 and 200 Simple Moving Averages (SMAs) while still below a bearish 100 SMA, the latter providing dynamic resistance at $1,956.60.

The 4-hour chart shows that technical indicators head north almost vertically while reaching overbought conditions. At the same time, the pair found buyers around a bullish 20 SMA and is currently advancing above a directionless 200 SMA. The strong momentum suggests XAU/USD will keep rallying, with eyes on $1,944.85, the 61.8% retracement of the aforementioned daily decline.

Support levels: 1,933.30 1,921.80 1,907.30

Resistance levels: 1,944.85 1,956.60 1,972.40

View Live Chart for XAU/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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