- Gold Price pares recent losses at weekly low after five-day losing streak.
- XAU/USD bears the burden of strong US Dollar, China woes.
- Mostly upbeat United States data, Federal Reserve talks propel yields, US Dollar and weigh on the Gold Price.
- Risk catalysts, mid-tier US data and Fed signals eyed for fresh impulse as bearish bias prods previous two-week rebound.
Gold Price (XAU/USD) portrays a corrective bounce from one-week low to $1,918 amid the initial hours of Thursday’s Asian session, after declining in the last five consecutive days. In doing so, the bright metal seeks more clues to defend the latest downside despite being bearish amid firmer US Dollar and the United States Treasury bond yields, not to forget fears emanating from China.
Gold Price drops as United States data, Federal Reserve signals favor US Dollar
Gold Price remains on the back foot as market players rush towards the US Dollar amid firmer United States data and hawkish Federal Reserve (Fed) signals. The same portrays the brighter odds of the US soft landing versus the fears of hard landing elsewhere in the major economies and increases the Greenback’s allure, weighing on the XAU/USD.
The US Dollar Index (DXY) rose to a fresh high since March 15, after Wednesday’s initial retreat, close to 105.00 by the press time.
On Wednesday, US ISM Services PMI rose to a six-month high of 54.5 in August versus 52.5 expected and 52.7 prior. Further, the final readings of the S&P Global Composite and Services PMIs eased to 50.2 and 50.5 for the said month compared to the initial estimations of 50.4 and 51.0 in that order. It should be noted that all three major constituents of the ISM Services PMI, namely Employment, New Orders and Prices Paid rose notably beyond the previous readings and helped the US Dollar to reverse early-day pullback.
Earlier in the week, the US Factory Orders for July dropped to the lowest since mid-2020 but the details about the orders excluding transport, shipments of goods and inventories were impressive to defend the hawkish Fed bias.
Elsewhere, Federal Reserve (Fed) Governor Christopher Waller defended hawkish monetary policy during a CNBC interview and Cleveland Federal Reserve President Loretta Mester ruled out rate cuts. However, Federal Reserve Bank of Boston President Susan Collins cited the risk of an overly restrictive stance on monetary policy to suggest the need for a patient and careful, but deliberate, approach.
Furthermore, the Fed’s Beige Book also pushed back expectations of witnessing either a policy pivot or rate cut while stating, “US economic growth was modest amid a coolinglabor market and slowing inflation pressures in July and August.”
While the US data and the Fed signals suggest brighter odds of the soft landing in the US and favored the US Dollar, as well as weakened the XAU/USD, economic fears surrounding China, the Eurozone and the UK seem to also direct the market players toward the Greenback and amplify the bearish bias about the Gold Price.
China woes also favor XAU/USD bears
Apart from the United States data and the Federal Reserve (Fed) signals, downbeat concerns about China, one of the world’s biggest Gold customers, also weighed on the precious metal.
Early-week disappointment from China Caixin Services PMI joined the market’s lack of confidence in the Dragon Nation’s stimulus to weigh on the concerns about Beijing, as well as the Gold Price. On the same line could be the US-China tension surrounding the trade conditions and Taiwan.
Late on Tuesday, US Commerce Secretary Gina Raimondo ruled out expectations of witnessing any revisions to US tariffs on China imposed during President Donald Trump's administration until an ongoing review is completed by the US Trade Representative's (USTR) Office, reported Reuters while citing the CNBC interview of the diplomat. These comments flag the continuation of the US-China tension and joined the fears about China’s economic recovery to weigh on the sentiment, which in turn underpinned the US Dollar’s run-up and weighed on the Gold Price.
Against this backdrop, the US 10-year Treasury bond yields rose to a two-week high of around 4.30% and the two-year refreshed weekly top above 5.0%, which in turn offered notable strength to the US Dollar and favored the Gold sellers. Further, the Wall Street benchmark closed in the red for the second consecutive day and challenged demand for riskier assets like Gold.
Multiple catalysts to watch for clear directions
Looking ahead, multiple Federal Reserve (Fed) speakers are scheduled to deliver speeches and can infuse volatility into the markets, making it more important to watch for Gold Price moves. Further, the weekly US Initial Jobless Claims and the quarterly readings of Nonfarm Productivity, as well as the Unit Labor Costs for the second quarter (Q2) will also be important to watch for clear directions. Additionally, headlines about China and recession woes in the major economies outside the US, not to forget the Sino–American tension updates, are also important for fresh impulse.
Also read: Gold Price Forecast: XAU/USD approaches $1,900 as odds for a Fed hike increase
Gold Price Technical Analysis
Gold Price justifies the week-start “Death Cross” bearish moving average crossover while declining in the last five consecutive days, backed by the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator. That said, the 50-bar Simple Moving Average’s (SMA) piercing of the 200-SMA portrays the “Death Cross” bearish crossover suggesting further declines in the underlying asset.
It’s worth noting, however, that the Relative Strength Index (RSI) line, placed at 14, is in the oversold territory, which in turn highlights the 100-SMA support of around $1,917 as a short-term key challenge for the XAU/USD sellers.
In a case where the Gold bears ignore the RSI conditions and break the stated SMA support, a horizontal area comprising multiple levels marked in the last three weeks, around $1,904, quickly followed by the $1,900 round figure to restrict the commodity’s further downside.
If at all the XAU/USD remains bearish past $1,900, the previous monthly low of around $1,885 will act as the final defense of the buyers.
On the contrary, the 200-SMA and 50-SMA guard immediate recovery of the Gold price near $1,929 and $1,933 respectively.
Following that, the previous support line from August 21, close to $1,945, will test the XAU/USD buyers before directing them to the 61.8% Fibonacci retracement of July-August downside, close to $1,949.
It should be observed that a seven-week-long falling resistance line surrounding $1,950 might act as an extra filter for the Gold buyers.
Overall, the Gold price remains bearish but the downside room appears limited.
Gold Price: Four-hour chart
Trend: Further downside expected
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
![EUR/USD stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.