Market news
02.08.2022, 05:21

Gold Price Forecast: XAU/USD retreats towards $1,750 as risk-aversion precedes NFP

  • Gold price pares daily gains while easing from 11-week-old resistance.
  • Recession, China weigh on market sentiment but US dollar fails to cheer risk-off mood amid mixed concerns.
  • Fedspeak, news surrounding Sino-American ties could entertain traders ahead of US NFP.

Gold price (XAU/USD) extends pullback from the nearly three-month-old resistance line as it drops to $1,773 during Tuesday’s initial European session. Even so, the precious metal prints a five-day uptrend around the highest levels since  July 05.

The metal’s early-day run-up could be linked to the broad US dollar weakness while tracking the Treasury yields. However, headlines surrounding China and escalating fears of the economic slowdown appeared to have pressured the XAU/USD prices afterward.

That said, US House Secretary Nancy Pelosi’s visit to Taiwan and the likely hardships for Chinese chipmakers due to the American consideration of limiting shipments of American chipmaking equipment also weigh on the market sentiment and the Aussie treasury yields. On the same line could be the news from a Chinese media report suggesting the dragon nation’s readiness for a military drill in Bohai, South China Sea.

Furthermore, Bloomberg’s piece signaling no hard boundaries for Beijing’s Gross Domestic Product (GDP) also appears to weigh on the market’s risk appetite. The news quotes people familiar with the matter as said, “China's top leaders told government officials last week that this year's economic growth target of "around 5.5%" should serve as guidance rather than a hard target that must be hit.”

It should be noted that China is among the world’s top gold consumers and negative headlines surrounding the same could weigh on gold prices.

Elsewhere, the recently disappointing US PMIs tracked the last week’s US Q2 Gross Domestic Product (GDP) to portray economic fears. Also weighing on the mood could be Fed Chair Jerome Powell’s indirect signals that the hawks are running out of steam.

While portraying the market’s sentiment, shares in the Asia-Pacific zone and the US stock futures print mild losses. However, US 10-year bond coupon declines 5.5 basis points (bps) to 2.55% at the latest and challenges the gold bears, by way of the US dollar weakness. That said, the US Dollar Index (DXY) refreshed the monthly low before bouncing off 105.00.

Looking forward, headlines surrounding China and the recession, as well as speeches from Chicago Fed President Charles L. Evans and President of the Federal Reserve Bank of St. Louis James Bullard will be important for intraday traders of gold.

Technical analysis

Gold price justifies the strength of a downward sloping resistance line from April 18 as the quote retreats to $1,773 after refreshing the monthly high near $1,780.

That said, the bullish MACD signals and the firmer RSI (14), not overbought, appear to favor the XAU/USD bulls targeting the metal’s run-up beyond the immediate trend line hurdle surrounding $1,780.

It’s worth noting that May’s low near $1,787 and the 50-DMA level near $1,794 could also challenge the short-term gold buyers.

On the flip side, an upward sloping support line from July 21, close to $1,741 by the press time, precedes the 21-DMA support near $1,733 to restrict the bullion’s short-term downside.

Overall, the gold price is likely to witness further upside even if the room to the north appears a shorter one.

Gold: Daily chart

Trend: Further upside expected

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location