XAUUSD @ 21.25 – Support/Resistance analysis: Gold Price Forecast: struggles near one-week low amid sustained USD buying

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XAUUSD @ 21.25 – Support/Resistance analysis: Gold Price Forecast: struggles near one-week low amid sustained USD buying

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• Gold witnesses selling for the second straight day on Tuesday amid modest USD strength.
• Hawkish Fed expectations and elevated US bond yields continue to underpin the greenback.
• Recession fears could limit losses for the safe-haven XAU/USD ahead of the FOMC minutes.

The pair currently trades last at 21.25.

The previous day high was 1802.51 while the previous day low was 1773.01. The daily 38.2% Fib levels comes at 1784.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1791.24, expected to provide resistance.

Gold attracts fresh selling near the $1,783 region on Tuesday and turns lower for the second successive day. The XAU/USD drops back closer to a one-week low touched the previous day, around the $1,774 area during the first half of the European session and now seems vulnerable to slide further.

Following a brief consolidation through the early part of trading on Tuesday, the US dollar gains some positive traction for the third straight day and exerts some pressure on the dollar-denominated gold. Despite last week’s softer US CPI report, Fed officials stressed that it is too soon to declare a victory on inflation and have maintained a hawkish tone. This, in turn, suggests that the Fed would stick to its policy tightening path and continues to underpin the greenback.

In fact, the markets are currently pricing in a greater chance of at least a 50 bps rate hike at the next FOMC policy meeting in September. This remains supportive of elevated US Treasury bond yields, which turns out to be another factor driving flows away from the non-yielding yellow metal. The downside, however, seems cushioned, at least for the time being, as investors might now prefer to move on the sidelines ahead of the FOMC meeting minutes, scheduled for release on Wednesday.

Investors would look for clues about the possibility of a larger 75 bps rate hike move in September. This would play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. In the meantime, growing worries about a global economic downturn could lend some support to the safe-haven precious metal. Traders now look forward to the housing market data and Industrial Production figures from the US for some impetus on Tuesday.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1775.29 at the time of writing. Pair opened at 1779.7 and is trading with a change of -0.25 % .

The pair is trading above its 20 Daily moving average @ 1758.01, below its 50 Daily moving average @ 1781.91 , below its 100 Daily moving average @ 1835.92 and below its 200 Daily moving average @ 1841.91

The previous day high was 1802.51 while the previous day low was 1773.01. The daily 38.2% Fib levels comes at 1784.28, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1791.24, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1767.64, 1755.57, 1738.14
• Pivot resistance is noted at 1797.14, 1814.57, 1826.64

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