Gold Price Forecast: XAU/USD looks to test $1,800 with a daily close above 100-day SMA

  • Gold remains on track to close the fourth straight day in the positive territory.
  • Next key resistance for XAU/USD is located at $1,800.
  • Gold could lose its bullish momentum if sellers drag the price below 100-day SMA.

Following the decisive rebound witnessed in the second half of the previous week, XAU/USD continued to edge higher and now looks to close the fourth straight trading day in the positive territory. As of writing, gold was up 0.26% on a daily basis at $1,792.

In the absence of high-tier macroeconomic data releases and fundamental developments, gold's movements remained relatively limited at the start of the week. Furthermore, the Independence Day holiday in the US caused the trading conditions to remain thin throughout the day.

On Friday, the US Bureau of Labor Statistics announced that Nonfarm Payrolls (NFP) in June surged by 850,000. This print beat the market expectation of 700,000 but the greenback came under renewed selling pressure ahead of the weekend. Further details of the publication revealed that the Labor Force Participation Rate remained unchanged at 61.6% and the Average Hourly Earning rose by 3.6% on a yearly basis, falling short of the market consensus of 3.7%. Reflecting the broad-based USD weakness, the US Dollar Index lost 0.3% on Friday.

On Tuesday, the ISM Services PMI data from the US will be looked upon for fresh impetus. Last week, the ISM Manufacturing PMI report showed that the Prices Paid component reached a new series high in June and the USD started to gather strength against its rivals. A similar reading with regards to input price pressures in the service sector could make it difficult for gold to extend its recovery and vice versa.

More importantly, the FOMC will release the FOMC's June meeting minutes. Previewing this event, "we will be looking for elaboration on the potential timeline for tapering after the relatively hawkish dot plot and press conference," said TD Securities analysts.

Gold technical outlook

On the daily chart, the Relative Strength Index (RSI) indicator is closing in on 50, suggesting that the bearish pressure is softening. Additionally, gold is floating a little above the 100-day SMA, which is currently located at $1,790. A daily close above that level is likely to attract additional buyers. However, Monday's action seems to be technical in nature and sellers could look to retain control unless the rebound is backed by a fundamental development.

On the upside, the next significant resistance is located at $1,800 (psychological level, Fibonacci 50% retracement of April-June uptrend) ahead of $1,810 (20-day SMA) and $1,825 (Fibonacci 38.2% retracement).

Supports, on the other hand, are located at $1,790 (100-day SMA) ahead of  $1,770 (Fibonacci 61.8% retracement) and $1,750 (June 29 low).



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