Gold Price Forecast: XAU/USD holds steady near $1,815, upside seems capped

Update: Gold traded with a mild positive bias heading into the European session, albeit lacked any follow-through buying and remained below multi-week tops touched on Monday. Currently hovering around the $1,816 region, worries about the potential economic fallout from the Delta variant of the coronavirus continued lending some support to the safe-haven XAU/USD. The market concerns were further fueled by Tuesday's disappointing release of the Conference Board's Consumer Confidence Index, which fell to a six-month low level of 113.8 in August.

However, a combination of factors held traders from placing aggressive bullish bets around gold and kept a lid on any further gains. The underlying bullish sentiment in the financial markets was seen as a key factor capping gains for the precious metal. The risk-on flow led to some follow-through uptick in the US Treasury bond yields, which extended some support to the US dollar and further acted as a headwind for the dollar-denominated commodity. Investors might also prefer to wait on the sidelines ahead of Friday's release of the US jobs data.

The closely-watched NFP report could provide fresh clues on when the Fed could begin rolling back its pandemic-era stimulus and raise the interest rate. This, in turn, will play a key role in determining the next leg of a directional move for the non-yielding gold. In the meantime, Wednesday's US economic docket – highlighting the releases of ADP report on private-sector employment and ISM Manufacturing PMI – might provide some trading impetus later during the early North American session.

Previous update: Gold (XAU/USD) keeps the previous day’s recovery moves around $1,815, despite the latest pullback from the intraday top, as European traders brush their screen for Wednesday’s tasks. That said, the yellow metal rises 0.07% on a day while preserving the weekly pattern of trading above 200-DMA.

In doing so, the gold prices track risk barometers like the US stock futures and Treasury yields to stay firmer. It should be noted, however, that the US Dollar Index (DXY) rebound, up 0.08% intraday by the press time around 92.73, probes gold buyers.

Mixed concerns over the upcoming moves of the US and European central banks join a lack of clarity over the coronavirus concerns to portray the cautious optimism in the markets. Recently, chatters over the European Central Bank’s (ECB) bond purchase cut gained momentum due to strong inflation data from the bloc. Though, US data kept confusing traders and highlight incoming data flow, as previously signaled by Fed Chairman Jerome Powell.

The preliminary reading of the Eurozone Consumer Price Index (CPI) for August jumped 3.0% YoY, the highest in over a decade whereas the US Housing Price Index for June eased but the S&P/Case Shiller Home Price Index jumped to 19.1% YoY during the stated month. Further, the August month’s Conference Board measure of Consumer Confidence fell to 113.8 from 125.1 whereas the Chicago Purchasing Managers’ Index (PMI) for August dropped to 66.8 versus 68.0 expected and 73.4 prior.

On a different page, the latest figures from Australia and New Zealand seem grim, China and the UK offer receding COVID-19 numbers to keep the buyers hopeful. It should be noted that the political jitters in Japan, concerning fresh elections, join the Sino–US tussles to challenge the bulls.

Amid these plays, S&P 500 Futures rise 0.30% by the press time whereas the US 10-year Treasury yields stretch the previous day’s upside to 1.33%, up to three basis points (bps).

As gold traders seek clarity over Fed Chairman Powell’s monetary policy outlook, Friday’s US jobs report for August become crucial for markets. Ahead of that, the US ADP Employment Change and ISM Manufacturing PMI for August can provide intermediate direction. Forecasts favor a firmer print of the early signal for Friday’s NFP, contrasts to a downbeat ISM Manufacturing PMI figures. If these data match mixed concerns, the gold prices may keep the latest rebound but hesitantly.

Technical analysis

Gold defends Friday’s upside break of 200-DMA so far during the week.

The commodity’s ability to stay above the key moving average joins bullish MACD to back the upside hopes.

However, a 13-day-old rising channel’s upper line near $1,827, followed by highs marked during July and August, respectively around $1,835 and $1,831, become tough nuts to crack for the bulls.

Meanwhile, the 200-DMA level of $1,809 guards gold’s immediate downside ahead of the confluence of the previous resistance line from June 01 and the lower line of the stated channel around $1,795.

Hence, gold prices pick up bids inside a crucial trading region between $1,795 and $1,835 ahead of important data/events.

Gold: Daily chart

Trend: Further upside expected