Gold Price Forecast: XAU/USD corrects from $1,780, upside remains favored on weaker DXY

Gold price is testing the upside break of the consolidation formed in a $1,764.45-1,775.35 range.
A slippage in US ISM New Orders Index data indicates the downside risk of demand ahead.
The US NFP is likely to slip to 250k from the prior release of 372k.

Sagar Dua FXStreet

Gold price (XAU/USD) has corrected t near $1,774.65 after printing a high of $1,780.58 in the early Tokyo session. The precious metal is likely to rebound again as an upside break of consolidation is followed by a low-volume test of the breakout. Earlier, the bright metal displayed an upside break of the consolidation formed in a $1,764.45-1,775.35 range.

Meanwhile, the US dollar index (DXY) has found a modest rebound after refreshing the three-week low at 105.05 at the open. The DXY has shifted into a negative trajectory as forward demand by retailers and producers has trimmed significantly. The US agency reported a vulnerable US Institute of Supply Management (ISM) Manufacturing New Orders Index data on Monday.

The economic data indicates forward demand by the retailers and producers. The data remained lower than the estimates of 52 and the prior print of 49.2 at 48. A meaningful trim in the demand forecast indicator resulted in a steep fall in the DXY.

Going forward, investors’ entire focus will remain on the mega event of the US Nonfarm Payrolls (NFP), which is due on Friday. As per the market consensus, the US economy has generated 250k jobs in July lower than June’s print of 372k. This will strengthen the gold price against the greenback.

Gold technical analysis

A rising channel formation by the gold prices on an hourly scale advocates the continuation of an upside move. The upper portion of the above-mentioned chart pattern is placed from July 22 high at $1,739.37 while the lower portion is plotted from July 21 low at $1,681.87.

Advancing 50-and 200-Exponential Moving Averages (EMAs) at $1,765.40 and $1,742.85 respectively adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is attempting to reclaim 60.00 levels. An occurrence of the same will warrant a fresh bullish impulsive wave.

Gold hourly chart

XAU/USD

Overview
Today last price	1774.04
Today Daily Change	1.84
Today Daily Change %	0.10
Today daily open	1772.2

Trends
Daily SMA20	1731.5
Daily SMA50	1795.61
Daily SMA100	1851.3
Daily SMA200	1842.41

Levels
Previous Daily High	1775.44
Previous Daily Low	1758.45
Previous Weekly High	1768.04
Previous Weekly Low	1711.55
Previous Monthly High	1814.37
Previous Monthly Low	1680.91
Daily Fibonacci 38.2%	1768.95
Daily Fibonacci 61.8%	1764.94
Daily Pivot Point S1	1761.95
Daily Pivot Point S2	1751.71
Daily Pivot Point S3	1744.96
Daily Pivot Point R1	1778.94
Daily Pivot Point R2	1785.69
Daily Pivot Point R3	1795.93

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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