The gold price begins the new week lower as the US Dollar strengthens.
The gold price falls on the opening day of a busy week and remains around the lower half of a two-week-old trading range throughout the Asian session. Despite minor US Dollar (USD) gain. The expectation that the Federal Reserve (Fed) would raise interest rates by another 25 basis points (bps). At the end of a two-day meeting on Wednesday permits the Greenback to gain some positive traction for the third consecutive day.
This, in turn, is viewed as a major factor impacting on the commodity denominated in US dollars. Furthermore, expectations that the European Central Bank (ECB) will surprise with a 50-bps rate hike. On Thursday contribute to a shift away from the non-yielding yellow metal. Concerns about economic headwinds caused by increased borrowing. The safe-haven XAUUSD is supported by charges.
The United States’ (USD) Advance Gross Domestic Product (GDP) data issued last week revealed. That the world’s largest economy slowed more than predicted in the first quarter.
Meanwhile, the official Chinese Manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 in April from 51.9 in March. According to data released on Sunday. Furthermore, factory activity in Japan. The world’s third-largest economy, fell for the sixth consecutive month in April.
The incoming data fuels recession worries. Which, along with expectations that the US central bank would maintain rates constant beyond May for the remainder of the year. May help limit the downside for the gold price, at least for the time being. This may deter traders from putting excessive negative bets before of the event. On Wednesday and Thursday, there are serious central bank event concerns.
Traders may also opt to remain on the sidelines when important central bank event risks approach.
The spotlight will next move to Friday’s release of the carefully regarded US monthly employment figures. The widely publicized Nonfarm Payrolls (NFP) data will have a significant impact on the near-term USD price dynamics and will define the next leg of a directional rise for the US Dollar-denominated gold price. Meanwhile, traders on Monday will take cues from the release of the US ISM Manufacturing PMI, which is due later in the early North American session amid relatively thin liquidity due to Europe’s Labor Day holiday.
Gold Technical Analysis
Technically, any additional decline would most likely find solid support at the $1,975-$1,974 horizontal zone, ahead of the $1,970-$1,969 region. Some follow-through selling will signal a breach of a short-term trading range, exposing the gold price to further decline.
The XAUUSD might then accelerate its decline towards the $1,948 resistance breakpoint, which has now turned support, on its way to the 50-day Simple Moving Average (SMA), which is now located between $1,937 and $14,936.
A decisive break below the latter will expose the $1,900 round-figure barrier, which corresponds with the 100-day simple moving average and should serve as a firm foundation for the yellow metal.
In contrast, the $2,000 psychological barrier has surfaced as an urgent impediment. This is followed by the $2,010-$2,012 supply zone, which, if forcefully cleared, will cancel any gains. Short-term bearishness may drive some technical purchasing.
The gold price may rise to the $2,039-$2,040 zone before attempting to challenge the YTD top, which was reached on April 13 in the $2,048-$2,049 region. Sustained strength above the latter will be viewed as a new trigger for bulls, paving the way for a move towards the 2022 swing high, which is expected to be around the $2,070 region and the $2,074-$2,075 zone, or the all-time high achieved in August 2020.
