Gold Price Forecast: XAU/USD firming up as investors drop the US Dollar

Valeria Bednarik FXStreet

XAU/USD Current price: $1,971.91

Easing global inflation boosts hopes for a soft landing.
A better market mood keeps investors away from the Greenback.
XAU/USD extended its recovery and is on track to test the $2,000 level.

Optimism pushes XAU/USD higher at the beginning of the week as investors move away from the US Dollar. The bright metal trades at around $1,972, trimming most of the European Central Bank (ECB) inspired losses. Gold recovery gained momentum with Wall Street’s opening, as stocks maintain the positive tone from last week amid signs of easing global inflation.

Following German and United States (US) inflation-related data released on Friday, the Eurozone reported on Monday that the Harmonized Index of Consumer Prices (HICP) declined by 0.1% MoM in July, according to preliminary estimates, while the annual figure hit 5.3%, easing from the previous 5.5%.

The upbeat mood pressures the US Dollar, which loses ground unevenly against all its major rivals. Commodity-linked currencies are the best performers, while European counterparts are the worst.

Meanwhile, market participants await American employment-related figures. The US will release this week June JOLTS Job Openings, the ADP survey on private job creation, and the usual weekly unemployment stats ahead of the July Nonfarm Payrolls report (NFP) next Friday, expected to show 200K new jobs created in the month.

XAU/USD price short-term technical outlook

The daily chart for the XAU/USD pair shows that the risk skews to the upside, as the pair is recovering ground above a bullish 100 Simple Moving Average (SMA) after finding buyers for a third consecutive day around an also bullish 20 SMA. In the meantime, technical indicators remain within positive territory, although the Momentum lacks directional strength. Finally, Gold has recovered above the 23.6% Fibonacci retracement of its latest daily run at $1,967.40, an immediate support level.

In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bullish stance. The pair develops above all its moving averages, although the 20 SMA is flat above the longer ones. The Momentum indicator is stuck around neutral levels without providing directional clues, while the Relative Strength Index (RSI) indicator consolidates around 59, suggesting buyers have paused for now.

Support levels: 1,967.40 1,954.90 1,943.50

Resistance levels: 1,975.60 1,984.50 1,996.70

View Live Chart for XAU/USD

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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