The price of gold at 1,947.21 dollars per ounce receives some safe-haven investments on Wednesday, but there is limited continuation in terms of support for the price.

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• Gold price attracts some haven flows on Wednesday, albeit lacks follow-through.

The pair currently trades last at 1947.21.

The previous day high was 1966.08 while the previous day low was 1941.33. The daily 38.2% Fib levels comes at 1950.78, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1956.63, expected to provide resistance.

Gold price gains some positive traction during the Asian session on Wednesday and reverses a part of the previous day’s sharp fall to the $1,941 area, or a three-week low. The XAU/USD, however, struggles to capitalize on the modest intraday uptick and currently trade just below the $1,950 level, still up over 0.20% for the day.

Fitch downgraded the US Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’, pointing to expected fiscal deterioration over the next three years, an erosion of governance and a growing general debt burden. The announcement tempers investors’ appetite for riskier assets, which is evident from a modest decline in the US equity futures and offers some support to the traditional safe-haven Gold price. This, along with some intraday US Dollar (USD) selling, turns out to be another factor acting as a tailwind for the XAU/USD.

The downside for the USD, however, remains cushioned, at least for the time being, in the wake of rising bets for one more 25 basis points (bps) rate hike by the Federal Reserve (Fed) in September or November. It is worth recalling that Fed Chair Jerome Powell said last week that the economy still needs to slow and the labour market to weaken for inflation to credibly return to the 2% target. Adding to this, the incoming US macro data points to an extremely resilient economy and further supports prospects for further tightening by the Fed.

In fact, the Advance US Gross Domestic Product (GDP) report revealed last week that the world’s largest economy expanded by a 2.4% annualized pace during the second quarter and eased exaggerated recession fears. Apart from this, data on Tuesday showed the US factory production rebounded in the second quarter and ended two straight quarterly declines. Furthermore, construction spending increased solidly last month and May’s data was revised higher, which US job openings remained consistent with tight labor market conditions.

This, in turn, raises hopes of a soft landing for the US economy, which helps limit any meaningful losses for the USD and keeps a lid on the US Dollar-denominated Gold price. Apart from this, rising bets for additional rate hikes by the European Central Bank (ECB) and the Bank of England (BoE), along with expectations that the Bank of Japan (BoJ) will eventually move away from the ultra-accomodative policy stance, contributes to caping the non-yielding yellow metal. This, in turn, warrants some caution before placing aggressive bullish bets.

Traders now look foward to the US economic docket, featuring the release of the ADP report on private-sector employment later during the early North American session. This might influence the USD price dynamics, which, along with the broader risk sentiment, should provide a fresh impetus to the Gold price. The focus, however, will remain glued to the closely-watched US monthly employment details, popularly known as the NFP report, due on Friday. In the meantime, the XAU/USD is more likely to extend its range-bound price action.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1949.1 at the time of writing. Pair opened at 1944.31 and is trading with a change of 0.25 % .

The pair is trading below its 20 Daily moving average @ 1951.54, above its 50 Daily moving average @ 1945.84 , below its 100 Daily moving average @ 1968.4 and above its 200 Daily moving average @ 1890.75

The previous day high was 1966.08 while the previous day low was 1941.33. The daily 38.2% Fib levels comes at 1950.78, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1956.63, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1935.07, 1925.82, 1910.32
• Pivot resistance is noted at 1959.82, 1975.32, 1984.57

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