- US dollar licks its wounds, still supportive of Gold’s upside.
- ISM Manufacturing PMI and Employment Index to improve.
- Technical set up still favors the XAU bulls.
Gold (XAU/USD) has entered a phase of consolidation in the European session, having fresh two-week highs at $1992.
The bulls take a breather after the latest leg higher and await the crucial US ISM Manufacturing PMI and Employment sub-index release for fresh trading impulse. The US ISM Manufacturing PMI is seen higher at 54.5 in August vs. July 54.2 while the Employment Index is expected to rise to 45.8 in the reported month vs. 44.3 last.
Both these data due to be published by the ISM institute, at 1400 GMT, are likely to show an improvement in August, which could offer some signs of life to the US dollar.
Therefore, gold prices could see a corrective move lower if the dollar rebound on upbeat data. In contrast, the ISM Manufacturing data disappointment could exacerbate the pain in the dollar, which in turn would drive the yellow metal past the $2000 barrier.
Meanwhile, the sentiment on Wall Street will also remain a key driver for fresh gold trades. At the time of writing, the US dollar has bounced off over a two-year low, still nurses a 0.28% loss to trade below 92.00.
Gold: Technical outlook
From the technical perspective, gold has almost tested the target at $1994 after it charted a pennant breakout on the hourly sticks earlier this Tuesday. The next hurdle in sight remains the $2000 mark. Alternatively, the pattern resistance now support at $1972 will act as the immediate cushion, below which the $1970 level could be challenged.
Gold: Additional levels
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