The price of gold, represented by #XAUUSD at 1,933.61, is decreasing for the second consecutive day due to slight gains in the US Dollar, causing some pressure on the gold market.

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• Gold price drifts lower for the second straight day and is pressured by modest US Dollar strength.

The pair currently trades last at 1933.61.

The previous day high was 1946.82 while the previous day low was 1931.51. The daily 38.2% Fib levels comes at 1937.36, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1940.97, expected to provide resistance.

Gold price remains under some selling pressure for the second successive day on Tuesday and drops to a fresh daily low, around the $1,931 area during the Asian session. The XAU/USD, however, manages to hold above a three-and-half-week low touched last Friday.

The prospects for further policy tightening by the Federal Reserve (Fed) assist the US Dollar (USD) to regain some positive traction, which, in turn, is seen as a key factor weighing on the Gold price. In fact, market participants seem convinced that the Fed will deliver one more 25 basis point (bps) rate hike in September or November and the bets were reaffirmed by the monthly employment details from the United States (US). Despite a slight disappointment from the headline NFP, solid wage growth and an unexpected downtick in the jobless rate pointed to the continued tightness in the labour market. This, in turn, raised the odds of a soft landing for the US economy and should allow the US central bank to stick to its hawkish stance.

Adding to this, Fed Governor Michele Bowman said on Monday that additional interest rate hikes will likely be needed to lower inflation to the central bank’s 2% target. In remarks prepared for delivery to a “Fed Listens” event in Atlanta, Bowman added that inflation remains too elevated, and job growth and other indications of activity show the economy has continued expanding at a “moderate pace.” This, in turn, remains supportive of elevated US Treasury bond yields, which act as a tailwind for the USD and contribute to driving flows away from the non-yielding Gold price. Meanwhile, New York Fed President John Williams noted that the central bank will need to keep the restrictive stance for some time.

Williams, however, did not rule out the possibility of lowering rates in early 2024, depending on economic data. He added that inflation was coming down as hoped and that while he expected unemployment to rise slightly as the economy cooled. This might hold back the USD bulls from placing aggressive bets and help limit losses for the US Dollar-denominated Gold price. Traders might also prefer to wait for a fresh catalyst from the latest consumer inflation figures from China and the US, due for release on Wednesday and Thursday, respectively. Investors will look for signs of deflation, which could push back against expectations for additional rate hikes by the Fed and provide a goodish boost to the precious metal.

Given that consensus estimates point to a further moderation in inflationary pressures, surprisingly stronger data should lift bets for one more Fed rate hike by the end of this year. This, in turn, could weigh heavily on the Gold price, which is seen as a hedge against inflation. The mixed fundamental backdrop warrants some caution before positioning for a further depreciating move for the Gold price. The emergence of fresh selling, however, suggests that the downfall witnessed over the past three weeks or so is still far from being over and suggests that the path of least resistance for the XAU/USD is to the downside.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1932.58 at the time of writing. Pair opened at 1936.68 and is trading with a change of -0.21 % .

The pair is trading below its 20 Daily moving average @ 1955.11, below its 50 Daily moving average @ 1945.03 , below its 100 Daily moving average @ 1968.56 and above its 200 Daily moving average @ 1896.36

The previous day high was 1946.82 while the previous day low was 1931.51. The daily 38.2% Fib levels comes at 1937.36, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1940.97, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1929.85, 1923.03, 1914.54
• Pivot resistance is noted at 1945.16, 1953.65, 1960.47

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