Gold Price Forecast: XAU/USD clings to small daily gains near $1,790 in choppy day

• Gold struggles to extend three-day run-up, picks up bids of late.
• Risk appetite sours as traders await Fed minutes to confirm reduction in rate hike bets.
• CFTC data shows reduction in gold buying, covid woes also probe the bulls.
• US holiday, light calendar elsewhere signal subdued markets ahead.

Update, July 5: The XAU/USD pair capitalized on the modest selling pressure surrounding the greenback in the second half of the previous week and managed to close in the positive for three straight days. After staying relatively quiet during the Asian trading hours on Monday, gold edged higher in the European session and was last seen gaining 0.25% on a daily basis at $1,791.60. Nevertheless, the subdued trading action due to the Independence Day holiday in the US is likely to make it difficult for the pair to extend its rebound in the remainder of the day. There won't be any macroeconomic data releases that could potentially impact gold's valuation either.

Meanwhile, indecision over the US Federal Reserve’s (Fed) next moves can keep the gold prices directionless. Friday’s US jobs report for June marked an uptick in the Unemployment Rate while also suggesting the Nonfarm Payrolls jumped to a 10-month high. Although the mixed data dims the bullish bets over the Fed’s next action, strong inflation numbers and firmer economic recovery from the coronavirus (COVID-19) help build a consensus of the Fed’s monetary policy adjustments, which in turn puts a bid under the US dollar and weigh on gold.

Unlike the US, covid conditions are grim in the Asia-Pacific region, offering additional strength to the US currency. Furthermore, recently weak activity numbers from China and CFTC data, signaling the softening of the bullish bias for gold during the week ended on June 29, also weigh on the gold prices.

Against this backdrop, S&P 500 Futures print mild losses and the Asian stocks are pressured as well, favoring the US dollar rebound and tests gold’s run-up. However, an off in the US challenges the commodity’s short-term mover with eyes on the Fed minutes, up for publishing on Wednesday, for fresh impulse.

Technical analysis

Gold’s recovery from mid-April lows confronts the 100-DMA upside hurdle around $1,790 ahead of a six-week-old horizontal area surrounding $1,798–99.

It’s worth noting that the $1,800 threshold and the mid-May low close to $1,808 add to the upside filters.

MACD conditions also justify the bullish momentum hopes, as the MACD line is up for crossing the signal line, suggesting the upside moves going forward.

Even if the quote fails to cross the nearby resistances, the pullback moves will have strong support surrounding $1,755, comprising multiple levels since March 18, to recall the gold bears.

Additionally, March month’s double bottom surrounding $1,676-78 also become the key challenge to the metal’s downside.

Gold: Daily chart

Trend: Further recovery expected

Previous updates

Gold (XAU/USD) prices remain sidelined, recently picking up bids, around $1,787 as European traders brace for Monday’s bell. The yellow metal rose for three consecutive days the last before recently battling the key moving average, namely 100-DMA, amid subdued markets.

Even so, hopes of the economic recovery from the pandemic and the US dollar’s latest pullback keep gold buyers hopeful amid a quiet session and an extended holiday in the US. Also supporting the precious metal could be the Bloomberg analysis suggesting, “Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.”

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