During the Asian session on Thursday, the price of GOLD ticked higher, rebounding from a three-week low in the $1,933-$1,932 region. Currently trading around $1,937-$1,938, the XAU/USD pair exhibits a mild positive bias with nearly a 0.20% gain for the day. However, a significant upward movement remains elusive.
The US Dollar (USD) is experiencing a bullish consolidation phase, maintaining a subdued and range-bound price action near its highest level since July 7. This strength in the USD is supporting the Gold price, which is denominated in US Dollars. Nonetheless, expectations of the Federal Reserve keeping interest rates higher for an extended period are preventing aggressive bullish bets on the USD, thus limiting the upside for gold.
The ADP National Employment report revealed that private-sector employers in the US added 324K jobs in July, surpassing the expected 189K. This indicates ongoing labor market resilience and supports the Fed’s hawkish stance, leading to elevated US Treasury bond yields. These factors suggest a further near-term rise for the USD, which may weigh down the GOLD price.
Investors have taken into account the Fitch downgrade of the US government’s credit rating to AA+ from AAA, along with China’s unexpected rise in Caixin Services PMI. The slight recovery in global risk sentiment, evident from a modest rebound in US equity futures, is keeping a cap on the safe-haven appeal of Gold, adding to the negative outlook and cautioning bullish traders.
Looking ahead, market participants will closely monitor the US economic docket, including Weekly Initial Jobless Claims, ISM Services PMI, and Factory Orders during the early North American session. These, along with US bond yields, may influence the USD price dynamics and provide impetus to the Gold price. Traders will also consider broader risk sentiment while keeping a focus on the upcoming US jobs data (NFP report) on Friday.
Gold Technical Outlook:
GOLD Price experienced a clear break of the $1,945 support confluence, now acting as resistance, which attracted bears on Wednesday. The descending Relative Strength Index (RSI) line at 14 and bearish signals from the Moving Average Convergence and Divergence (MACD) indicator support the downside bias for XAU/USD. The current ascending support line from late November 2022 near $1,930 could be a critical level, with a break potentially leading to a decline toward a five-month rising trend line around $1,918.
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