Gold Prices Linger Near Two-Week High Amid US Dollar Downtick: What’s Next?

For the second consecutive day on Tuesday, GOLD experiences buyer interest, closely approaching a two-week peak achieved the day before. During the Asian trading hours, XAU/USD remains above the $1,920 mark, bolstered by a slight decline in the US Dollar (USD). The US Dollar Index (DXY) – a metric reflecting the USD’s performance against a selection of currencies – pulls back from its June 1 pinnacle reached last Friday.

This dip lends support to GOLD , driven mainly by a reduction in US Treasury bond yields. However, prospective interest rate hikes by the Federal Reserve (Fed) could counteract significant USD drops. Just last week, Fed Chair Jerome Powell commented on persistently high inflation, affirming the Fed’s commitment to rate hikes to address it.

Furthermore, the robustness of the US economy might necessitate sustained high-interest rates. Last week’s elevation in the yield of the key 10-year US bond, fueled by these anticipations, might continue to fortify the USD. Encouragingly, China’s recent initiatives aimed at attracting investors to its distressed stock markets could moderate the appeal of GOLD as a safe-haven asset, prompting investor prudence.

However, the GOLD market remains somewhat safeguarded due to concerns over a potential pronounced global economic slump, especially centered around China, favoring gold’s safe-haven allure. The market’s attention will pivot to the forthcoming release of China’s August PMI figures. Also, significant US economic data releases, including the pivotal Non-Farm Payrolls (NFP) report, will guide investors and shape the trajectory for the metal’s future price movement.

Gold Technical Outlook

GOLD hovers between the 50 and 200 EMA, with the MACD indicating potential downward movement.

The Relative Strength Index (RSI) at 14 and XAU/USD’s steady trading above $1,910 provide a bullish hint. The 50-EMA and an upward trend solidify $1,910 as pivotal support. The 200-EMA and the 38.2% Fibonacci retracement at $1,925 limit immediate bullish progress. Resistance exists near $1,930, while a drop below $1,910 could lead to $1,884. Gold’s recovery journey appears challenging.