May 26, 2024

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Gold Price Forecast: XAU/USD awaits key US data to seek acceptance above $1,970

3 min read
  • Gold price returns to the red on Tuesday after two straight days of gains.
  • Dismal US JOLTS Job Openings and ISM Manufacturing PMI could revive Gold buyers.
  • Gold price eyes a sustained break above the 100-Daily Moving Averages (DMA) as RSI stays bullish.

Gold price returned to the red early Tuesday, following a positive start to the week, as the United States Dollar (USD) continued to push higher across the board. Attention now turns toward the top-tier US JOLTS Job Openings and ISM Manufacturing PMI data for fresh trading impetus in the Gold price.

US JOLTS Job Openings and ISM Manufacturing PMI data

The US Dollar is extending the previous gains amid a cautious market mood, as optimism surrounding a potential Chinese stimulus fades, as the economy continues to underperform. China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) returned to contraction, arriving at 49.2 in July vs. 50.5 previous and 50.3 expected. Disappointing Chinese PMIs revived fears over economic concerns, collaborating to the latest leg higher in the safe-haven US Dollar at the expense of the Gold price.

The Asian indices have pared early gains while the US Treasury bond yields are consolidating below the 4.0% key level, awaiting a fresh batch of top-tier economic data from the United States for fresh hints on the US Federal Reserve (Fed) interest rates path.

On Monday, better-than-forecast preliminary Gross Domestic Product (GDP) and cooling inflation in the Eurozone soothed markets, fuelling risk-on trades across the financial markets. However, the Greenback continued to benefit amid position readjustments, following the previous week’s Fed decision and heading into Friday’s US Nonfarm Payrolls data release.

Gold price, initially, extended the rebound from two-week lows of $1,943 reached last Friday but Gold sellers continued to lurk above the $1,970 round figure, reversing some of the daily gains.

In the day ahead, US JOLTS Job Openings are seen falling 9.62 million in June, compared with 9.824 million booked in June. A persistent decline in job openings, below the 10 million mark, creates a dilemma for the Fed, as the US labor market conditions remain out of balance. Therefore, disappointing jobs data could revive the selling interest in the US Dollar, motivating Gold bulls to regain the upside traction. Further, if the US ISM Manufacturing PMI shows a deepening contraction, it will add to the US Dollar’s downside, boosting expectations that the Fed is nearing the end of its tightening cycle.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price failed to find acceptance above the bullish 100-Daily Moving Averages (DMA) of $1,970 on Monday.

However, the 14-day Relative Strength Index stays bullish above the midline, suggesting that risks remain skewed to the upside for Gold price and, therefore, any pullback could be seen as a good buying opportunity for traders.

The 21 and 50 DMAs Bull Cross confirmed last week also adds credence to the bullish potential in Gold price.

Daily close above the 100 DMA at $1,970 is need to revive the latest upswing, with eyes on the multi-month highs of $1,988. Ahead of that, Thursday’s high of $1,982 will offer strong resistance to Gold buyers.

Conversely, Gold pricecould see a limited pullback toward 21 and 50 DMAs confluence support near $1,950. A break below the latter will open up a fresh downside toward the two-week lows of $1,943, below the $1,930 round figure could be put to test.

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