- XAU/USD is edging lower following last week's rally.
- Gold could extend correction to $1,810 with a daily close below $1,820.
- There won't be any high-tier data releases featured in US economic docket on Tuesday.
Update: Labour Day holidays witnessed a robust US dollar which pressured the price of the yellow metal throughout the North American time zone on Monday.
The greenback, as measured in the DXY index, was over 0.12% higher by the start of early Asia a 92.2260.
The index has rallied from a low of 92.035 to a high of 92.311 on the day.
This left gold reeling in the wake of a robust US dollar and concerns centred around the global growth recovery following last week's major miss in Nonfarm Payrolls in the world's largest economy.
At the time of writing, XAU/USD is trading at $1,823.34 and down 0.24% after falling from a high of $1,830.30 to a low of $1,821.50.
Looking ahead, the Reserve Bank of Australia is going to be the highlight for markets.
Australia, as being the world's second-largest producer of gold, has seen gold vs the Aussie dollar rise during the nation's monetary easing and post easing cycles of the past.
End of update
Gold spent the majority of the previous week moving sideways in a tight range above $1,800 but managed to gain traction following the disappointing August jobs report from the US on Friday. After posting its highest weekly close since late July at $1,827, however, the XAU/USD pair reversed its direction on Monday and was last seen losing 0.3% on a daily basis at $1,822.
In the absence of significant fundamental drivers, gold's action seems to be a technical correction of last Friday's upsurge. Additionally, trading conditions remain thin due to the Labor Day holiday in the US, confirming the view that gold is staying in a consolidation phase rather than moving into a downtrend.
On Tuesday, there won't be any high-tier macroeconomic data releases from the US and the risk perception could impact the greenback's valuation and XAU/USD's movements.
The data published by the US Bureau of Labor Statistics revealed on Friday that Nonfarm Payrolls (NFP) rose by 235,000 in August. This print missed the market expectation of 750,000 by a wide margin and the S&P 500 Index closed the day flat. In case Wall Street's main indexes turn south following the long weekend, the greenback could find demand as a safe haven and force XAU/USD to remain on the back foot.
On the other hand, the dismal NFP reading is also seen as a factor that could allow the Federal Reserve to delay asset tapering. A dovish policy outlook is likely to limit the USD's gains in the near term.
Meanwhile, the trading activity in gold futures points to additional gains. "Open interest in gold futures markets rose by nearly 9K contracts on Friday and reversed two consecutive daily pullbacks considering flash data from CME Group," said FXStreet Lead European Editor Pablo Piovano. "In the same line, volume went up by almost 75K contracts, also following two daily drops in a row."
Gold technical outlook
On the downside, the initial support is located at $1,820 (Fibonacci 38.2% retracement of April-June uptrend). With a daily close below that level, gold could extend its slide toward $1,810 (200-day SMA). In case this level turns into resistance, the next target is located at $1,800 (psychological level).
Resistances could be seen at $1,830 (static level), $1,845 (static level) and $1,855 (Fibonacci 23.6% retracement).
Additional levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD rises toward 1.0800 on USD weakness
EUR/USD trades in positive territory above 1.0750 in the second half of the day on Monday. The US Dollar struggles to find demand as investors reassess the Fed's rate outlook following Friday's disappointing labor market data.
GBP/USD closes in on 1.2600 as risk mood improves
Following Friday's volatile action, GBP/USD pushes higher toward 1.2600 on Monday. Soft April jobs report from the US and the improvement seen in risk mood make it difficult for the US Dollar to gather strength.
Gold holds on to modest gains around $2,320
Gold trades decisively higher on the day above $2,320 in the American session. Retreating US Treasury bond yields after weaker-than-expected US employment data and escalating geopolitical tensions help XAU/USD stretch higher.
Addressing the crypto investor dilemma: To invest or not? Premium
Bitcoin price trades around $63,000 with no directional bias. The consolidation has pushed crypto investors into a state of uncertainty. Investors can expect a bullish directional bias above $70,000 and a bearish one below $50,000.
Three fundamentals for the week: Two central bank decisions and one sensitive US Premium
The Reserve Bank of Australia is set to strike a more hawkish tone, reversing its dovish shift. Policymakers at the Bank of England may open the door to a rate cut in June.