Gold Price Forecast: XAU/USD retreats from $1,740 support-turned-resistance, US data eyed

Gold price (XAU/USD) refreshes intraday low near $1,736 during Tuesday’s Asian session, following a failed bounce off the one-month low. In doing so, the metal prices take clues from the US dollar’s latest rebound from the intraday low, as well as justify the challenges to the market sentiment emanating from China and the central bankers’ front.

That said, the US Dollar Index (DXY) rebound from the daily bottom to 108.81, after reversing from a fresh 19-year high the previous day. In doing so, the greenback’s gauge versus the six major currencies seems to justify the market’s fears of higher rates despite the impending economic slowdown, as previously signaled by Fed Chair Jerome Powell.

It’s worth noting that the chatters of an increase in the Sino-American tussles over Taiwan also exert downside pressure on the XAU/USD prices, mainly due to Beijing’s status as one of the world’s biggest commodity users. The news also fuels the US dollar’s safe-haven appeals. Recently, Politico came out with the news suggesting the Biden administration to ask congress to approve a $1.1bln arms sale to Taiwan. Before that, the movement of the US vessels in the Taiwan Strait and American diplomats’ visits to Taipei teased China.

Alternatively, Bloomberg’s latest news surrounding the Eurozone’s ability to battle the energy crisis seems to challenge the XAU/USD bears. “The European Union is set to meet its gas storage filling goal two months ahead of target as the bloc braces for a tough winter with Russia limiting supplies and soaring energy prices raging through the continent,” mentioned Bloomberg.

On Monday, markets consolidated the latest moves amid a light calendar and mixed Fedspeak. That said, Dallas Fed Manufacturing Business Index improved to -12.9 versus -20.2 expected and -22.6 prior. It should be noted that Minneapolis Federal Reserve Bank President Neel Kashkari stated that people now understand how serious we are about getting inflation back to 2%.

Amid these plays¸ the US 10-year Treasury yields retreat to 3.10% following the two-day uptrend to refresh the monthly high. With this, the S&P 500 Futures pares intraday gains.

Moving on, emphasizes the US Consumer Confidence for August and comments from Fed speakers as the main catalysts to watch for fresh impulse. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.

Technical analysis

Gold price pulls back from the previous support line from July 21, backed by RSI (14) retreat.

The latest weakness in prices, however, needs validation from the 61.8% Fibonacci retracement level of July-August upside, near $1,729, to convince XAU/USD sellers.

Following that, $1,710 and the yearly low marked in the last month around $1,680 will be in focus.

Alternatively, an upside clearance of the $1,740 immediate hurdle could quickly propel gold price towards a weekly resistance line near $1,761.

If at all the XAU/USD prices remain firmer past $1,761, the 100-SMA level near $1,766 might act as the last defense for bears before directing the quote towards the monthly peak of $1,807.

Gold: Four-hour chart

Trend: Further weakness expected