Gold price begins to gain positive momentum on Friday, but there is a lack of strong buying activity to sustain the uptrend.

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• Gold price regins positive traction on Friday, though lacks strong follow-through buying.

The pair currently trades last at 1971.27.

The previous day high was 1987.54 while the previous day low was 1965.41. The daily 38.2% Fib levels comes at 1973.86, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1979.09, expected to provide resistance.

Gold price attracts some dip-buying during the Asian session on Friday and reverses a part of the previous day’s retracement slide from the $1,987-$1,988 region, or over a two-month peak. The XAU/USD currently trades just below the $1,975 level, up over 0.15% for the day, though the fundamental backdrop warrants some caution before positioning for any further appreciating move.

A generally softer tone around the equity markets, along with concerns over slowing economic growth in China, the worsening US-China trade ties and geopolitical risks, continue to lend some support to the safe-haven precious metal. Apart from this, the subdued US Dollar (USD) price action turns out to be another factor benefitting the Gold price. In fact, the USD Index (USD), which tracks the Greenback against a basket of currencies, is seen consolidating the overnight gains to over a one-week high as traders seem uncertain about the Federal Reserve’s (Fed) future rate-hike path.

It is worth mentioning that the markets have been pricing out the possibility of any further interest rate hikes after the anticipated 25 basis points (bps) lift-off at the upcoming Federal Open Market Committee (FOMC) meeting on July 25-26. That said, the upbeat Initial Jobless Claims data released from the United States (US) on Thursday pointed to a still-tight labour market and supports prospects for further policy tightening by the Fed. This further raises doubts if the Fed will commit to a more dovish policy stance or stick to its forecast for a 50 bps rate hike by the end of this year.

Hence, the focus will remain glued to the highly-anticipated FOMC policy decision, due to be announced next Wednesday. This will be followed by the European Central Bank (ECB) meeting on Thursday and the latest monetary policy update by the Bank of Japan (BoJ) on Friday. Heading into the key central bank event risk, traders might refrain from placing aggressive directional bets and prefer to wait on the sidelines. This could lead to subdued price action around the Gold price in the absence of any relevant market-moving economic data from the US on Friday.

Nevertheless, the XAU/USD remains on track to end in the green for the third successive week and the recent breakout through a cluster of resistance favours bullish traders. Hence, any meaningful corrective decline might still be seen as a buying opportunity and is more likely to remain limited, at least for the time being.

From a technical perspective, any subsequent move up now seems to confront some resistance near the $1,980 area ahead of the overnight swing high, around the $1,987-$1,988 region. Some follow-through buying has the potential to lift the Gold price beyond the $2,000 psychological mark, towards testing the next relevant hurdle near the $2,010-$2,012 supply zone.

On the flip side, the $1,965 area (overnight swing low), which is followed by the 100-day Simple Moving Average (SMA), currently pegged around the $1,960 region, should protect the immediate downside. Failure to defend the said support levels will expose the weekly low, around the $1,946-$1,945 zone, below which the Gold price could accelerate the fall towards the $1,934 horizontal support. Any subsequent fall, however, is more likely to attract fresh buyers and remain limited near the $1,926-$1,925 region.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1972.38 at the time of writing. Pair opened at 1969.41 and is trading with a change of 0.15 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1935.1, 50 SMA 1950.09, 100 SMA @ 1959.51 and 200 SMA @ 1878.3.

The previous day high was 1987.54 while the previous day low was 1965.41. The daily 38.2% Fib levels comes at 1973.86, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1979.09, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1960.7, 1951.99, 1938.57
• Pivot resistance is noted at 1982.83, 1996.25, 2004.96

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