Gold Price Forecast: XAU/USD struggles on the way to $1,800, full markets, ISM Services PMI eyed
- Gold seesaws inside a choppy range after four-day uptrend.
- Risk appetite improves despite mixed covid headlines, indecision over Fed’s action.
- US traders return after a long weekend may cheer upbeat data, inflation risk can’t be undermined.
- ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound
Gold (XAU/USD) recovery fades during the fifth day of trading after refreshing the multi-day low on June 29. That said, gold bulls take a breather around key technical levels surrounding $1,791, following an upside break of a short-term hurdle the previous day, amid an early Asian session on Tuesday.
Bulls await more clues…
With the US markets’ extended weekend restricting clues to stretch Friday’s optimism, post US jobs report, gold traders await initial full market reactions to the latest catalysts to keep the gold buyers hopeful.
Among them, the coronavirus headlines gain major attention as fears of another strain called Epsilon, which is resistant to the vaccine, battles the UK and German moves to ease the virus-led restrictions. Also, Australia keeps struggling with the Delta covid variant even as the government allowed citizens to take AstraZeneca jabs if they wish.
Further, downbeat inflation expectations, according to the 10-year breakeven inflation rate of the St. Louis Federal Reserve (FRED) also weigh on the market sentiment. The reason could be traced from the recently mixed US figures. On Friday, US Nonfarm Payrolls (NFP) jumped to a 10-month high but an uptick in the Unemployment Rate seemed to have probed the odds backing the Fed’s monetary policy adjustments.
On a different page, OPEC+'s indecision over the crude output cut leads to sustained restrictions ahead of the next meeting, which in turn lends indirect support to the gold prices.
Amid these plays, S&P 500 Futures stay mildly bid around the record top while the US 10-year Treasury yields lick their wounds around 1.43% by the press time.
Moving on, US ISM Services PMI for June, expected 63.5 versus 64.0 prior, will be crucial as gold buyers seek further deterioration of the factors supporting the Fed’s rate hike moves ahead of Wednesday’s FOMC minutes.
Technical analysis
Gold (XAU/USD) prices battle 100-SMA after crossing a 12-day-old resistance line the previous day.
The yellow metal’s reluctance to pierce the key SMA could be traced to the peaking Momentum line. However, bulls may follow MACD signals to remain hopeful unless the quote drops back below the previous resistance line near $1,787.
Following that, $1,773 and the $1,773 levels may entertain short-term sellers ahead of directing them to June’s low around $1,750.
Meanwhile, an upside clearance of the $1,794 immediate SMA hurdle will need validation from the $1,800 threshold before directing the bulls toward the 200-SMA level near $1,844.
It’s worth noting that a horizontal line comprising multiple levels marked during June 10-15 around $1,870 could probe gold buyers past $1,844.
Overall, gold bulls flex muscles but need strong support for conviction.
Gold: Four-hour chart
Trend: Further recovery expected
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Gold Weekly Forecast: XAU/USD fails to clear key resistance at $1,790