The price of gold (XAU/USD) remains under pressure, hitting its lowest level in three weeks despite recent consolidation. The precious metal has experienced a three-day losing streak, primarily driven by a stronger US Dollar and an overall risk-off mood in the market. Concerns over a potential US default and robust US ADP Employment Change data have propelled the US Dollar, weighing down on XAU/USD.
Although policymakers have defended US Treasury bonds, and there are hopes for positive US economic growth, the Gold sellers are still active ahead of mid-tier US data, particularly related to employment and activities for July. Market participants are closely monitoring the US ISM Services PMI for July and the second-quarter readings of Nonfarm Productivity and Unit Labor Costs to gauge the potential impact on Friday’s US Nonfarm Payrolls (NFP) and the US Dollar movements.
The upbeat Caixin Manufacturing PMI from China has provided some support for the XAU/USD price, but strong negative news from Beijing would be required to maintain the optimism of Gold bears.
From a technical perspective, the Gold Price faces a significant resistance-turned-support level around $1,955, which includes the Fibonacci 23.6% on a weekly basis and the middle Band of the Bollinger on a one-day chart. The ongoing preference for the US Dollar and cautious market sentiment reinforce the bearish bias for XAU/USD.
Immediate upside for the Gold Price is capped near $1,940, where a convergence of the previous weekly low, Pivot Point one-week S1, and Fibonacci 38.2% on a one-day chart is present. A rally beyond $1,955 could potentially lead the price to challenge the 100-DMA resistance at approximately $1,970.
On the downside, immediate support for the Gold Price lies near $1,935, represented by the Fibonacci 61.8% on a one-month chart. A break below this level may open the way for further declines unless the metal finds support around $1,915, which includes the Pivot Point one-month S1 and the lower band of the Bollinger on the daily chart.
In case of further downward movement, the Gold sellers will encounter resistance near $1,915 and $1,910, before potentially driving the price towards the $1,900 psychological round figure.
