Gold remained stuck at a three-week high, continuing a two-day rally.
Gold Price (XAUUSD) lacks upside momentum after reaching the highest level in three weeks, hitting about $1,937-38 recently, as traders seek further evidence to corroborate the dovish sentiment towards the US Federal Reserve (Fed) that gained pace following the previous day’s disappointing US data.
Concerns over China, a cautious atmosphere ahead of top-tier US data, and slow yields put the Gold bulls to the test.
The XAUUSD bulls may also be challenged by conflicting concerns concerningUS-China relations and low US Treasury bond rates.
The cautious attitude ahead of the US ADP Employment Change, final readings of the US second quarter (Q2) Gross Domestic Product (GDP), and Personal Consumption Expenditure (PCE) appear to spur gold purchasers at the multi-day high. However, the previous day’s poor US consumer confidence, employment, and housing data raised concerns about the Fed’s policy shift, particularly as Fed Chair Jerome Powell emphasized the data-dependency for future steps to justify the hawkish stance.
Elsewhere, China’s dissatisfaction with US Commerce Secretary Gina Raimondo’s concerns about difficulties for US companies in China prods gold purchasers. The International Monetary Fund’s (IMF) willingness to be more cautious might be along the same lines. Due to the current climate of increased interest rates and inflation, while assigning Special Drawing Rights (SDRs) in the future.
Among these bets, the S&P 500 Futures are struggling to extend their three-day upswing, while the US Dollar Index (DXY) is stuck at 103.55 after plunging the most in six weeks. Nonetheless, US Treasury bond rates remain at a two-week low.
Weaker US jobs and inflation fears will allow gold to test its monthly high.
Looking forward, US statistics and China news will be critical for determining direction, as XAUUSD bulls look to be running out of steam.
Technical Analysis
In the midst of an overbought RSI (14) line, Gold Price struggles to explain the evident upside breach of a monthly horizontal barrier, now support, as well as the 200-SMA.
The 50% Fibonacci retracement level is also posing a challenge to the XAUUSD bulls. Retracement of its July-August drop, roughly $1,836.
XAUUSD bulls can test the 61.8% Fibonacci ratio of about $1,948 if the Gold Price continues stronger past the 200-SMA and the previously indicated resistance-turned-support region, as well as ignoring the overbought RSI.
Following that, a downward-sloping resistance line from July 20, close to $1,958 at the latest, will pose a challenge to Gold buyers.
Meanwhile, a clear downside breach of the aforementioned important moving average and support zone, which are located at $1,933 and $1,932-30, respectively, might reawaken the Gold sellers.
Nonetheless, an upward trend line from August 31, at $1,817 at press time, may pose a challenge to the XAUUSD bears before ceding control.
Overall, the Gold Price is still on the bull’s radar until it breaks through 1870 support level.
