The price of gold, represented by XAUUSD, has fallen below a resistance level that has been in place for over two months. This drop occurred as investors were more willing to take on risk, causing bullish sentiment to increase. However, it is anticipated that there will be only minimal gains in the future.

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• Gold Price retreats below 2.5-month-old horizontal resistance after bulls cheered risk-on mood on Monday.

The pair currently trades last at 1965.60.

The previous day high was 1963.56 while the previous day low was 1945.5. The daily 38.2% Fib levels comes at 1956.66, expected to provide support. Similarly, the daily 61.8% fib level is at 1952.4, expected to provide support.

Gold Price (XAU/USD) pauses two-day recovery from the key moving average confluence as market players await the United States manufacturing activity data for July on early Tuesday in Asia. That said, the latest Federal Reserve (Fed) Bank Loan Survey showed grim outcomes and joined China news to allow the US Dollar to remain firmer, which in turn prod the Gold Price run-up beneath the key $1,985 hurdle, close to $1,965 by the press time. It’s worth noting that the risk-on mood allowed XAU/USD to remain firmer in the last two consecutive days.

Gold Price fades the two-day recovery moves amid recently grind headlines from China, as well as downbeat Federal Reserve (Fed) Bank Loan Survey. That said, China Commerce Ministry renews the Sino-US trade war fears by announcing measures to limit exports of some drones and drone-related equipment, starting from September 01, by citing the “national security and interests” late Monday suggests Reuters. It’s worth noting that China is a major global drone exporter and caters to various top-tier economies in that matter, including the US. As per the previous announcements from the US policymakers, China’s DJI provided more than 50% of the drones sold in the US, used mostly for public safety.

On the other hand, the Fed’s quarterly Senior Loan Officer Opinion Survey (SLOOS) US banks reported tighter credit standards and weaker loan demand during the second quarter (Q2 2023).

Additionally, the market’s cautious mood ahead of the US ISM Manufacturing PMI, as well as final prints of July’s S&P Global PMIs also challenges the previously firmer risk appetite and the Gold Price upside. While portraying the sentiment, S&P500 Futures remain sidelined after posting an upbeat start of the week while the United States Treasury bond yields pick up bids after declining in the last two consecutive days.

China stimulus joined receding fears of the higher rates at the major central banks, as well as upbeat performance of the US giants during the latest earnings season, to propel the sentiment and allow the Gold Price to remain firmer. It’s worth noting, however, that the firmer US Dollar Index prods the XAU/USD buyers.

China State Council unveiled a slew of stimulus measures to conserve and boost consumption, which in turn fuelled the market’s risk-on mood during early Monday. Adding to that was the improvement in China’s official PMI. That said, China’s official NBS Manufacturing PMI edges higher to 49.3 versus 49.2 expected and 49.0 prior but the Non-Manufacturing PMI eases to 51.5 from 53.2 prior.

On the other hand, Dallas Fed Manufacturing Business Index improves to -20.0 for July from -23.2 prior versus -26.3 expected whereas Chicago PMI rose to 42.8 from 41.5 prior versus 43.0 market forecasts. It should be noted that Friday’s softer prints of US inflation clues and the weekend comments from Minneapolis Fed President Neel Kashkari’s criticism of higher interest rates also exerted downside pressure on the greenback versus the Antipodeans even if the US Dollar Index managed to remain firmer on the day.

Against this backdrop, the US Dollar Index (DXY) managed to remain firmer on Monday, grinding higher towards 102.00 by the press time.

Moving on, the US Manufacturing Purchasing Managers Indexes (PMI) from the ISM and S&P Global for July will be crucial to determine intraday moves of the Gold Price amid the recently easing hawkish bias about the US Federal Reserve (Fed). It should be noted that the employment component of the scheduled PMIs will be closely observed since it’s the US Nonfarm Payrolls (NFP) week.

Also read: Gold Price Forecast: XAU/USD firming up as investors drop the US Dollar

Gold Price (XAU/USD) extends Friday’s recovery from the convergence of the 21-DMA and the 50-DMA amid firmer prints of the Relative Strength Index (RSI) line, placed at 14, as well as the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator.

With this, the XAU/USD is likely to extend the latest rebound toward the horizontal resistance area comprising multiple levels marked since May 16, around $1,985, can’t be ruled out.

However, the receding strength of the bullish MACD signals raises doubts about the Gold Price run-up past $1,985.

Also challenging the XAU/USD bulls is the $2,000 round figure and the 61.8% Fibonacci retracement of the May-June downturn, close to $2,010, a break of which will give control to the Gold buyers.

On the contrary, the 21-DMA and 50-DMA, around $1,950-45 restrict short-term Gold Price downside.

Following that, a slew of peaks and troughs marked since late May, around $1,930, and the $1,900 round figure can act as the final defense of the Gold buyers.

Overall, the Gold price is likely to again confront the short-term key upside hurdle but is likely to print one more failure to cross the same.

Trend: Limited upside expected

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1965.28 at the time of writing. Pair opened at 1959.5 and is trading with a change of 0.29% % .

The pair is trading above its 20 Daily moving average @ 1948.39, above its 50 Daily moving average @ 1946.6 , below its 100 Daily moving average @ 1967.14 and above its 200 Daily moving average @ 1887.74

The previous day high was 1963.56 while the previous day low was 1945.5. The daily 38.2% Fib levels comes at 1956.66, expected to provide support. Similarly, the daily 61.8% fib level is at 1952.4, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1948.81, 1938.13, 1930.75
• Pivot resistance is noted at 1966.87, 1974.25, 1984.93

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