- The price of gold remains stable after bouncing from its monthly low.
- DXY pullback underpins rally as yields decline, recession woes test XAU/USD bulls.
- Cautious sentiment ahead of the Jackson Hole symposium and US data could restrict immediate moves.
The Gold price (XAU/USD) remains lateralized near 1,745-46 dollarsafter the rebound from the monthly low, as traders prepare for the European session on Wednesday.
Thus, the shiny metal portrays the markets’ cautious mood ahead of the release of US Durable Goods Orders for July. Additionally, bullion’s immediate moves are limited by the news that global monetary policy makers have just left for Friday’s keynote speech at the Kansas City Fed symposium in Jackson Hole.
“Many of the central bankers heading to the Grand Teton mountains this week are hoping today’s inflationary pressures will subside quickly enough to allow them to offset anticipated downturns in economies around the world,” Reuters notes.
It should be noted that the decline in the 10-year US Treasury yield, which fell 2.5 basis points (bp) to 3.03%, also favors the price of gold. Conversely, economic fears surrounding China, the world’s largest commodity consumer, weigh on XAU/USD prices: “Authorities have been trying to put a floor on a slowdown spurred by the deepening crisis China’s real estate sector, as well as the continuing hit to consumer and business sentiment fueled by a Covid containment strategy,” Bloomberg said.
Amid these moves, equity futures remain slightly bid, while the Dollar Index (DXY) hovers around intraday highs, after reversing the previous day’s yearly high.
Next, US Durable Goods Orders for July, expected 0.6% vs. 2.0% prior, will be important for intraday directions. However, more attention will need to be paid to Friday’s speech by Fed Chairman Jerome Powell at the Jackson Hole symposium. Should policy makers accept the recession as a greater risk than inflation and are willing to reverse the previously aggressive bias, XAU/USD could see further gains.
Gold Technical Analysis
A clear break to the upside of the descending trend line from two weeks ago keeps XAU/USD buyers hopeful amid a firmer RSI (14). However, the MACD gives a slightly negative signal and therefore the immediate hurdle surrounding the 100 and 200 HMAs, respectively near $1,748 and $1,764, will be important for the gold price upside to watch. .
If the price breaks above $1,764, the mid-August high near $1,785 will be a major hurdle to watch. before welcoming XAU/USD bulls.
On the contrary, the pullback remains elusive until the pair sustains beyond the previous resistance line from Aug 12 around $1,737 at time of writing.
If the price of gold weakens beyond $1,737, a decline to the monthly low near $1,727 looks imminent..
Gold: Four-hour chart
Trend: Further weakness expected
Source: Fx Street
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