Gold Price (XAU/USD) exhibits a restrained ascent from its current position at a three-week pinnacle, with its valuation oscillating around the vicinity of $1,937-38. The prevailing market sentiment is driven by a quest for corroborative signals that would validate the revised dovish orientation adopted by the US Federal Reserve (Fed). This shift in bias gained substantial traction subsequent to the preceding day’s unveiling of underwhelming US economic indicators. However, the trajectory of XAU/USD bulls is met with certain impediments, emanating from the ambivalent panorama shaping US-China relations and the languid performance of the US Treasury bond yields.
An Atmosphere of Prudence in Anticipation of Key US Economic Data
An aura of cautiousness pervades the trading landscape as participants anxiously await the release of significant US economic data. This data includes the US Automatic Data Processing (ADP) Employment Change, the final assessments of the second quarter (Q2) Gross Domestic Product (GDP), and the Personal Consumption Expenditure (PCE). The accumulation of such critical data acts as a catalyst, propelling the Gold buyers into action as they operate within the backdrop of multi-day highs. It is worth mentioning that the market’s apprehensions stem from the repercussions of the preceding day’s disheartening revelations concerning US consumer confidence, employment statistics, and housing data. These figures collectively engendered concerns regarding a potential paradigm shift in the Fed’s policy trajectory. This concern is amplified by the noteworthy observation of Federal Reserve Chair Jerome Powell, who articulated the reliance on data as a cornerstone of future decisions aimed at safeguarding the prevailing hawkish disposition.
Concurrently, an additional layer of perturbation is introduced by China’s apparent disapproval of US Commerce Secretary Gina Raimondo’s grievances about the tribulations faced by US enterprises operating in China. This sentiment is paralleled by the International Monetary Fund’s (IMF) announcement of an intention to exercise heightened caution in the allocation of Special Drawing Rights (SDRs) in the foreseeable future. This decision is predicated on the prevailing climate characterized by elevated interest rates and inflation.
In the overarching scenario, the trajectory of S&P 500 Futures grapples with the endeavor to extend the momentum of a three-day upward surge. Meanwhile, the US Dollar Index (DXY) remains entrenched in a dormant state around the vicinity of 103.55, following its most substantial retreat within a span of six weeks. Coinciding with this trend, US Treasury bond yields exhibit stability at a nadir that has endured for two weeks.
A Glance Toward the Future: Dependent on US Data and China-Related Developments
As the discourse regarding Gold Price unfolds, the terrain of the future stands poised to be sculpted by forthcoming US data and developments emanating from China. In the midst of these unfolding narratives, the XAU/USD bulls appear to be grappling with an ebbing reservoir of momentum.
Technical Appraisal of Gold Price
The Gold Price endeavors to validate its assertive breach beyond a monthly horizontal resistance level, now effectively functioning as a support, in conjunction with the 200-day Simple Moving Average (SMA). This ambition faces challenges from the perspective of the Relative Strength Index (RSI) indicator (14), which finds itself within the realms of overbought territory.
In alignment with these technical considerations, the XAU/USD bulls encounter an additional impediment embodied by the 50% Fibonacci retracement of the fall witnessed during the interval between July and August, which is situated at approximately $1,836.
In the event that the Gold Price exhibits resilience, securing its stance beyond the 200-SMA and effectively embracing the previously delineated resistance, which has now transitioned into a support, the XAU/USD bulls may find the impetus to confront the 61.8% Fibonacci ratio, nestled around $1,948.
Nonetheless, the ascending trajectory is set to face the formidable challenge posed by a downward-sloping resistance line originating from July 20, located in proximity to the $1,958 threshold.
In stark contrast, a decisive downward breach of the pivotal moving average and the associated support zone, each approximately positioned at $1,933 and $1,932–30, respectively, could potentially beckon the Gold sellers into action.
Moreover, an ascending trend line traced back to August 31, situated around the $1,817 mark at present, stands as an additional barrier capable of halting the momentum of the XAU/USD bears prior to relinquishing control.
In summation, the Gold Price remains an object of focus for the bullish sentiment, unless the critical support level of $1,817 is punctured, heralding a transformative shift in the trajectory.