#XAUUSD @ 1703.18 Gold reverses an intraday dip to sub-$1,700 levels, though struggles to gain any meaningful traction. (Pivot Orderbook analysis)

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• Gold reverses an intraday dip to sub-$1,700 levels, though struggles to gain any meaningful traction.
• A modest USD weakness offers some support; bets for more aggressive Fed rate hikes continue to cap.
• Signs of stability in the equity markets also suggest that the path of least resistance is to the downside.

The pair currently trades last at 1703.18.

The previous day high was 1731.87 while the previous day low was 1697.09. The daily 38.2% Fib levels comes at 1710.38, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1718.58, expected to provide resistance.

Gold shows resilience below the $1,700 mark for the second successive day and attracts some dip-buying on Wednesday. The XAU/USD sticks to a mild positive bias through the early North American session, though seems to struggle to capitalize on the move and remains below the $1,710 level.

Following the previous day’s stronger US CPI-inspired rally, the US dollar edges lower and turns out to be a key factor offering some support to the dollar-denominated commodity. The modest USD downtick lacks any obvious fundamental catalyst and is more likely to remain limited amid expectations that the Fed will keep raising interest rates at a faster pace to tame inflation.

The implied odds for a full 1% rate hike at the September FOMC meeting stands at 34%. Moreover, the markets have also been pricing in another 75 bps rate hike move in November. This, in turn, lifts the yield on the rate-sensitive two-year US government bond to levels last seen in November 2007 and the benchmark 10-year Treasury note holds steady near the YTD peak touched in June.

The prospects for a more aggressive policy tightening by the Fed, along with elevated US Treasury bond yields, favours the USD bulls and caps the non-yielding gold. Apart from this, a modest recovery in the risk sentiment – as depicted by signs of stability in the equity markets – further contributes to keeping a lid on any meaningful upside for the safe-haven precious metal.

Looking at the broader picture, gold has been oscillating in a familiar band over the past two weeks or so. Given that the XAU/USD, so far, has been struggling to gain any meaningful traction, the range-bound price action might still be categorized as a bearish consolidation phase. This, in turn, suggests that the path of least resistance for the commodity is to the downside.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1703.82 at the time of writing. Pair opened at 1702.18 and is trading with a change of 0.1 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1728.35, 50 SMA 1740.95, 100 SMA @ 1791.91 and 200 SMA @ 1832.87.

The previous day high was 1731.87 while the previous day low was 1697.09. The daily 38.2% Fib levels comes at 1710.38, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1718.58, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1688.89, 1675.6, 1654.11
• Pivot resistance is noted at 1723.67, 1745.16, 1758.45

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