The price of gold (XAUUSD) decreases for the second consecutive day on Tuesday but does not continue to decline significantly.

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• Gold price edges lower for the second straight day on Tuesday, albeit lacks follow-through.

The pair currently trades last at 1937.56.

The previous day high was 1946.35 while the previous day low was 1936.86. The daily 38.2% Fib levels comes at 1940.49, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1942.72, expected to provide resistance.

Gold price trades with a negative bias for the second straight day on Tuesday, albeit lacks follow-through and remains well within a familiar range held over the past week or so. The XAU/USD is currently placed just below the $1,940 level, down less than 0.10% for the day, and is pressured by a combination of factors.

Despite signs that labour market conditions in the United States (US) were easing, the Federal Reserve (Fed) is widely expected to keep interest rates higher for longer. Moreover, the markets are still pricing in the possibility of one more 25 basis points (bps) lift-off by the end of this year. This, in turn, remains supportive of elevated US Treasury bond yields, which lend some support to the US Dollar (USD) and undermine the non-yielding Gold price.

Apart from this, a generally positive risk tone, bolstered by hopes that China will announce more stimulus to shore up a slowing economic recovery, dents demand for the safe-haven XAU/USD. It is worth recalling that China increased local dollar liquidity and loosened some mortgage rules last week to support the ailing property sector. Furthermore, China’s Country Garden Holdings reached a deal with debtholders to postpone some payments that were due on Saturday.

Adding to this, China’s top economic planner – the National Development and Reform Commission (NDRC) – said this Monday that it would establish a designated department to bolster the country’s faltering private economy. This further boosts investors’ confidence and remains supportive of the underlying bullish sentiment around the equity markets. The downside for the Gold price, however, seems cushioned amid expectations the Fed is nearing the end of its rate-hiking cycle.

In fact, the US central bank is widely anticipated to leave interest rates unchanged at its September policy meeting and the bets were lifted by the mixed US jobs data. The better-than-expected headline NFP was offset by a downward revision of the previous month’s reading and an unexpected rise in the unemployment rate. Moreover, Average Hourly Earnings edged lower to 4.3% on a yearly basis from 4.4% and points to a slight deterioration in the labour market.

This gives the Fed less headroom to keep raising interest rates, which, in turn, is holding back the USD bulls from placing fresh bets and acting as a tailwind for the US Dollar-denominated Gold price. Hence, it will be prudent to wait for strong follow-through selling before confirming that the recent recovery from the $1,885 region, or the lowest level since March 13 has run its course and placing aggressive bearish bets around the XAU/USD.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1937.54 at the time of writing. Pair opened at 1938.23 and is trading with a change of -0.04 % .

The pair is trading above its 20 Daily moving average @ 1915.19, above its 50 Daily moving average @ 1931.57 , below its 100 Daily moving average @ 1953.72 and above its 200 Daily moving average @ 1915.78

The previous day high was 1946.35 while the previous day low was 1936.86. The daily 38.2% Fib levels comes at 1940.49, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1942.72, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1934.61, 1930.99, 1925.12
• Pivot resistance is noted at 1944.1, 1949.97, 1953.59

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