Gold Price Forecast: XAU/USD corrects from $1,780, upside remains favored on weaker DXY
|- Gold price is testing the upside break of the consolidation formed in a $1,764.45-1,775.35 range.
- A slippage in US ISM New Orders Index data indicates the downside risk of demand ahead.
- The US NFP is likely to slip to 250k from the prior release of 372k.
Gold price (XAU/USD) has corrected t near $1,774.65 after printing a high of $1,780.58 in the early Tokyo session. The precious metal is likely to rebound again as an upside break of consolidation is followed by a low-volume test of the breakout. Earlier, the bright metal displayed an upside break of the consolidation formed in a $1,764.45-1,775.35 range.
Meanwhile, the US dollar index (DXY) has found a modest rebound after refreshing the three-week low at 105.05 at the open. The DXY has shifted into a negative trajectory as forward demand by retailers and producers has trimmed significantly. The US agency reported a vulnerable US Institute of Supply Management (ISM) Manufacturing New Orders Index data on Monday.
The economic data indicates forward demand by the retailers and producers. The data remained lower than the estimates of 52 and the prior print of 49.2 at 48. A meaningful trim in the demand forecast indicator resulted in a steep fall in the DXY.
Going forward, investors’ entire focus will remain on the mega event of the US Nonfarm Payrolls (NFP), which is due on Friday. As per the market consensus, the US economy has generated 250k jobs in July lower than June’s print of 372k. This will strengthen the gold price against the greenback.
Gold technical analysis
A rising channel formation by the gold prices on an hourly scale advocates the continuation of an upside move. The upper portion of the above-mentioned chart pattern is placed from July 22 high at $1,739.37 while the lower portion is plotted from July 21 low at $1,681.87.
Advancing 50-and 200-Exponential Moving Averages (EMAs) at $1,765.40 and $1,742.85 respectively adds to the upside filters.
Meanwhile, the Relative Strength Index (RSI) (14) is attempting to reclaim 60.00 levels. An occurrence of the same will warrant a fresh bullish impulsive wave.
Gold hourly chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.