Gold Price Forecast: XAU/USD bounces-back towards $1820 amid light trading

Update: Gold price is recovering from fresh session lows of $1812 reached in the last hour, although remains well off the four-week highs of $1823. The pullback in gold price comes on the back of a stall in the US dollar’s downside amid sluggish markets, courtesy of the observance of the Summer Bank Holiday in the UK this Monday.

Despite the retreat, gold’s bullish potential remains intact amid dovish Fed Chair Powell’s stance on the monetary policy at the Jackson Hole Symposium last week. Powell fell short of providing any timeline for tapering while downplaying chance of interest rate hikes, which weighed heavily on the US dollar alongside the Treasury yields, in turn, benefiting gold price.

Next of relevance for the yellow metal remains the US NFP due on Friday for the next direction in prices. In the meantime, the Fed’s speculation on tapering combined with the covid updates will keep gold traders entertained.

Read: Gold Price Forecast: XAU/USD set to test $1830 amid golden cross, dovish Powell

Gold (XAU/USD) seesaws around $1,815, after stepping back from a two-week high, ahead of Monday’s European session. In doing so, the gold prices consolidate Friday’s heavy rise, following Fed Chair Powell’s Jackson Hole speech. The gold sellers might have cheered multi-day high levels to take quick gains amid mixed catalysts and cautious sentiment ahead of the crucial US Nonfarm Payrolls (NFP), up for publishing on Friday.

Although the US Dollar Index (DXY) refreshes a two-week low and S&P 500 Futures print mild gains, gold drops around 0.08% intraday by the press time as markets sentiment dwindles due to the coronavirus and geopolitical headlines. Also challenging the gold traders could be Fed Chair Powell’s emphasis on incoming data, especially employment details, before the key jobs report for August.

On Friday, Fed Chair Powell buoyed global market sentiment despite signaling taper this year. The reason could be linked to the central banker’s refrain from offering any exact timing and indicating a gap between the taper and rate hike.

Also joining the pre-NFP caution is the escalating covid woes as Australia refreshes record infections and warn of further jumps in hospitalizations before the likely peak in October. Additionally, Japan is troubled as the expiry of virus-led emergency nears in the 21 of Japan's 47 prefectures on September 12. The US and the UK are both struggling over the recent jump in the death tolls and push for third vaccine shots but global scientists highlight fears of Delta covid variant while spotting a six-month immunity even after taking jabs.

Elsewhere, a fresh attack on Kabul airport and hurricane Ida joins the US-China tensions to weigh on gold prices. US officials cited five rockets fired at Kabul airport on early Monday while Ida eased to category 3 storm. Further, US President Joe Biden’s criticism of Beijing’s meddling into the virus origin inquiry and refrains to hold Taliban accountable for the latest attack on the Kabul airport flash mixed signals.

Moving on, a light calendar and mixed catalysts can keep troubling XAU/USD traders, likely extending the latest consolidation, but the bulls can remain hopeful due to the Fed’s measured approach over tapering and rate hike. However, it all depends upon Friday’s US jobs data that needs to back Powell’s cautious optimism to keep gold buyers hopeful.

Technical analysis

Despite stepping back from a six-week-old descending trend line, gold keeps upside break of the key $1,810-08 support confluence, previous resistance, comprising 200-DMA and descending trend line from June.

The same joins firmer RSI conditions to keep gold buyers hopeful of breaking the $1,830 immediate hurdle.

However, any further upside will be challenged by the last month’s high near $1,835.

On the flip side, a daily closing below $1,808 will need a confirmation from the $1,800 threshold to recall the gold sellers.

Following that, $1,775 and June’s low of $1,750 should return to the charts.

Overall, gold bulls remain dominant despite the recent pullback moves. Though, the $1,830–35 area poses a serious challenge to the upside momentum.

Gold: Daily chart

Trend: Further upside expected