- Gold prices remain pressured for third consecutive day, off intraday low.
- Chatters over covid, US infrastructure bill test traders ahead of the key FOMC.
- US Durable Goods Orders, risk catalysts eyed for short-term direction.
- Gold Weekly Forecast: XAU/USD bears await break below 100-day SMA at $1,796
Update: Gold prices loiter near the $1,800 mark for the past five trading sessions. The US dollar remains steady near the four-month high ahead of the Fed’s interest rate decision. The prices moved cautiously despite the general negative sentiments surrounding the greenback. The yields on the benchmark US 10-year Treasury bonds recovered to 1.28% after retreating towards 1.27% on Monday. Investors remain reluctant to open new big positions as they await the FOMC meeting outcome for further clues on the central bank’s next move on stimulus and economic outlook. The meeting would be followed by the speech of the Fed Chair Jerome Powell, which could alter the trader’s sentiment. The demand is also affected by the rising coronavirus delta variant. The higher USD valuations make the precious metal expensive for the other currencies holders.
Gold (XAU/USD) licks its wounds around $1,798 amid a subdued Asian session on Tuesday. The yellow metal bounces off an intraday low, but remains depressed for the third day in a row, as market players embrace the week’s key data/events amid mixed risk-related headlines.
While the coronavirus numbers in the UK and Australia placate market bears, the US flashes mixed readings and challenge the optimists over economic recovery. Reuters recently said, “The US Centers for Disease Control and Prevention (CDC) and State Department on Monday both warned against travel to Spain, Portugal, Cyprus and Kyrgyzstan because of a rising number of COVID-19 cases in those countries.” The list also included the UK and India amid delta variant fears.
The jump in covid cases can be witnessed in the states with lower vaccinations, pushing local governments for jabbing and limiting the international travels despite strong lobbying by the airlines and travel companies.
Even so, Wall Street managed to refresh record top amid a jump in technology shares and as downbeat US housing and activity numbers back the Federal Reserve’s easy-money policy.
It should be noted that the global investors’ cautious mood ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting joins the recent squabbling of the US Senators over President Joe Biden’s $1.2 trillion infrastructure plan to weigh on the sentiment. Additionally, the Sino-American tussles and China’s crackdown on technology companies may also challenge the gold traders.
Amid these plays, US 10-year Treasury yields remain firmer around 1.28% whereas S&P 500 Futures drop 0.10% despite the upbeat Wall Street close.
On a short-term basis, US Durable Goods Orders and Hosing Price Index for June will be important numbers to watch. Should the figures remain softer for June, the Fed will have another reason to reject tapering and back the gold buyers. It’s worth noting that the covid headlines and updates over US stimulus, not to forget the US-China news, should offer extra filters to gold moves.
Technical analysis
Gold bears cheer sustained pullback from the key SMAs to attack five-week-old horizontal support.
As MACD flirts with sellers, a clear downside break of the broad region between $1,795 and $1,789 becomes necessary for the bears to dominate going forward.
Following that, the monthly low of around $1,768 will be in focus.
On the flip side, 200-SMA guards the quote’s immediate upside near $1,805 before the 50-SMA level of $1,810.
Also acting as the key resistance is a descending trend line from July 15 near $1,813.
Overall, gold bears inch closer to crucial levels and can keep the reins but it all depends upon the Fed at the last.
Gold: Four-hour chart
Trend: Further weakness expected
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 turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.