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Gold Consolidates Over $1,760 Support - Weaker Dollar Underpins Demand

Gold Consolidates Over $1,760 Support – Weaker Dollar Underpins Demand

Posted Monday, August 1, 2022 by
Skerdian Meta • 2 min read

The gold price is trading at a one-month high as bulls pause scoring the largest weekly gain in nearly five months. Nonetheless, the yellow metal falls 0.25 percent intraday, halting a three-day rise near $1,760 in early Monday Europe trading.

The GOLD metal’s recent losses may be linked to the US dollar’s pause near the one-month low, which occurred during the four-day downturn. Nonetheless, the US Dollar Index (DXY) has risen from its intraday low to 105.80 as of press time.

The greenback’s recovery could be connected to the market’s gloomy mood amid new US-China squabbles over Taiwan. The latest hawkish comments from Minneapolis Fed President Neil Kashkari and a stronger print of the Fed’s preferred inflation gauge are likely to have halted the US dollar bears. Furthermore, the cautious mood ahead of Friday’s crucial US Nonfarm Payrolls (NFP) and disappointing Chinese PMI prints for July are likely to have weighed on gold prices.

XAU/USD

On the other hand, the US “technical recession” and prior comments from Fed Chair Jerome Powell signal that the US central bank has run out of steam for further rate hikes. Furthermore, the month-end consolidation of the US dollar could be blamed for the gold price recovery.

Amid these bets, US Treasury yields returned to 2.67 percent, up three basis points (bps), although S&P 500 Futures printed slight losses around 4,110 at the most recent close.

Given the market’s mixed feelings and the XAU/USD retreat, risk catalysts could entice traders ahead of the US ISM Manufacturing PMI for July, which is predicted to fall to 52 from 53. Nonetheless, gold traders are likely to be cautious ahead of Friday’s US Nonfarm Payrolls (NFP) for July, given calls for neutral rates and talk of a US recession.

Gold Technical Outlook

The gold price has settled at the main bearish channel’s resistance and is finding it difficult to breach it, so we prefer to stay for the time being until we get a clearer signal for the next trend, which we will get by breaching the mentioned resistance – now at 1767.70 – or breaking the 1755.70 support.

The inconsistency between the technical indicators is another reason for neutrality, as breaking the mentioned resistance can lead the price to achieve additional gains that begin at 1779.25 and extend to 1800.00, whereas breaking the support represents the key to resuming the main bearish wave and heading to negative targets that begin at 1726.60.

Today’s trading range is expected to be between 1740.00 support and 1780.00 resistance.

Today’s predicted trend: Neutral

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