Gold Price Forecast: XAU/USD jumps to fresh three-week tops, around $1,810 area

Update: Gold continued scaling higher through the first half of the European session and shot to near three-week tops, around the $1,809 region in the last hour. The XAU/USD built on its recent strong rebound from the $1,750 area, or the lowest level since mid-April and gained positive traction for the fifth consecutive session on Tuesday. Concerns about the spread of the highly contagious Delta variant of the coronavirus continued weighing on investors' sentiment and acted as a tailwind for traditional safe-haven assets, including gold.

Apart from this, the prevalent selling bias surrounding the US dollar was seen as another factor that provided an additional boost to the dollar-denominated commodity. An unexpected rise in the US unemployment rate overshadowed a big beat from the headline NFP print and calmed market fears about an earlier policy tightening by the Fed. Hence, the key focus will remain on Wednesday's release of the FOMC June meeting minutes. Investors will look for clues about the Fed's monetary policy outlook, which, in turn, will influence the non-yielding gold.

Meanwhile, Tuesday's strong move up could further be attributed to some technical buying on a sustained move beyond the $1,795 horizontal resistance. A subsequent move beyond the $1,800 mark might have already set the stage for additional gains. Market participants now look forward to the US economic docket, highlighting the release of the ISM Services PMI for some impetus later during the early North American session. Apart from this, the broader market risk sentiment and the USD price dynamics might further contribute to produce some short-term trading opportunities around gold.

Previous update: Gold price is accelerating its upbeat momentum, finally yielding a firm break above the $1800 mark, as it refreshes three-week highs.

The persistent downbeat mood around the US dollar continues to bode well for the USD-denominated gold price. The dollar bears the brunt of the uncertainty over the US Federal Reserve’s (Fed) next monetary policy move, especially in light of an NFP beat and a rise in the Unemployment rate to 5.9% in June.

Meanwhile, Euro area reopening optimism weighs on the dollar’s haven demand, adding to gold’s upside. Concerns over the delta covid variant flareups in Asia and its impact on the global economic recovery also continue to underpin gold’s safe-haven appeal.

Markets now await the US ISM Services PMI, with the focus on the inflation component for fresh US dollar valuation, which in turn, will have a significant impact on gold price. The ISM Services Prices Paid for June is expected to drop to 79.3 in June vs. 80.6 prior. On an upside surprise, the US dollar could attempt a rebound, although Wednesday’s FOMC minutes will be the key determinant of the near-term direction in the dollar as well as gold.  

Gold: Technical Outlook

Daily closing above the 100-Daily Moving Average (DMA) at $1790 on Monday has reinforced the bullish commitments, with the bulls now target the bearish 21-DMA at $1809. To unleash additional upside, gold price needs acceptance above $1800, which would then confirm a bullish reversal from two-month troughs of $1751.

Gold Price Chart: Daily