XAU/USD Eyes Deeper Losses If $1805 Support Caves In

1. XAU/USD Eyes Deeper Losses If
$1805 Support Caves In

2. Points To Be Covered Today:
• Gold Prices In August
• Technical Confluences Detector
• Gold Price: Key Levels To Watch
• Gold Begins NFP Week
• XAU/USD bulls hesitate as focus shift to NFP
• The Relative Strength Index (RSI) Indicator
• Gold Technical Outlook
• Gold Sentimental Poll

3. Gold Prices In August
• Gold price starts August in the red amid a rebound in risk appetite ahead of ISM.
• US infrastructure bill optimism, DYX weakness fails to offer reprieve to gold bulls.
• Gold: Bulls hesitate as focus shift to NFP.
• The downbeat tone around gold price remains unabated this Monday, as the bears
extended their control after Friday’s steep drop.
• The progress on the US infrastructure bill and broad US dollar weakness fail to offer
any reprieve to the bulls, as gold price heads towards the $1800 mark.

4. Gold Prices In August - I
• The risk-on rally in the global stocks combined with stabilizing
Treasury yields weighs negatively on gold price.
• Investors also ignore the mounting tensions surrounding the Delta
covid variant spread globally.
• Attention now turns towards US ISM Manufacturing PMI and
corporate earnings reports for fresh trading impulse.

5. Technical Confluences Detector
• The Technical Confluences Detector shows that gold has breached
powerful support at $1808, which was the convergence of
the Fibonacci 38.2% one-month, SMA50 four-hour and SMA10 one-day.
• Therefore, sellers now target the $1805 support, where the Bollinger Band
one-hour Lower lies.
• The next relevant cushion awaits at the SMA100 one-day at $1801, below
which a drop towards the previous week's lows around $1790 cannot be ruled
out.

6. Gold Price: Key Levels To Watch
• If the buyers recapture the abovementioned key support at $1808,
which has now turned into resistance, gold price could seek a retest
of the SMA100 four-hour at $1810.
• Further up, $1813 could act as a stiff resistance. At that point, the
SMA100 one-hour coincides with the previous high four-hour and
SMA5 four-hour.
• The Fibonacci 23.6% one-day at $1816 could be the next target of
interest for gold bulls.

7. Here Is How It Looks On TheTool

8. Gold Begins NFP Week
• Gold begins NFP week on a back foot amid steady US dollar.
• Market sentiment dwindles amid stimulus hopes, covid woes, yields drop but stocks futures gain.
• US ISM PMI can offer immediate direction but US jobs report is the key.
• Gold extended Friday's retracement slide from the $1,831-32 region, or two-week tops and
witnessed some follow-through selling on the first day of a new trading week.
• This marked the second successive session on a negative move and dragged the XAU/USD to two-
day lows, around the $1,807-06 region during the early European session.
• A generally positive tone around the equity markets was seen as a key factor that undermined
demand for the safe-haven precious metal.
• That said, a combination of factors should help limit any deeper losses for gold and warrant some
caution for aggressive bearish traders.

9. XAU/USD bulls hesitate as focus shift to NFP
• Gold posted gains for the week despite Friday’s pullback.
• FOMC Chairman Powell’s remarks and disappointing data weighed on USD.
• Gold’s near-term technical outlook turns neutral as focus shifts to US July jobs
report.
• After closing the previous week in the negative territory, gold stayed on the
back foot on Monday and dropped below $1,800.

10. XAU/USD Pair Managed To Stage An
Impressive Rebound
• However, the subdued market action ahead of key macroeconomic events
allowed the precious metal to stay in a consolidation phase on Tuesday.
• With the greenback coming under heavy selling pressure in the second half of
the week, the XAU/USD pair managed to stage an impressive rebound.
• Following a rally to a fresh two-week high of $1,832 on Thursday, the pair
retraced a portion of its upside but registered weekly gains by settling above
$1,810.

11. The US Federal Reserve
• The cautious market mood at the start of the week helped the USD stay resilient
against its rivals but gold also attracted some demand as a safe-haven and
XAU/USD struggled to make a decisive move in either direction.
• On Wednesday, the US Federal Reserve announced that it left the benchmark
interest rate, the target range for federal funds, unchanged at 0%-0.25% as widely
expected.
• Moreover, the central bank noted that it will continue to buy at least $80
billion/month of Treasuries and $40 billion/month of mortgage-backed securities until
substantial further progress is made on maximum employment and price stability
goals.
• In its policy statement, the FOMC reiterated that it will use the full range of its tools
to support the economic recovery.

12. The US Dollar Index
• During the press conference following the monetary policy decisions, FOMC
Chairman Jerome Powell acknowledged that policymakers started debating how
and when they can adjust asset purchases.
• Powell, however, refrained from suggesting that they could taper before the end of
the year and investors assessed his tone as relatively dovish.
• In the meantime, Powell repeated that higher-than-expected inflation is caused by
temporary factors.
• The US Dollar Index, which tracks the greenback’s performance against a basket
of six major currencies, turned south following the FOMC event and dropped to its
lowest level in a month below 92.00 on Friday, reflecting the broad-based USD
weakness.

13. US Bureau of Economic Analysis
• On Thursday, disappointing macroeconomic data releases from the US made
it difficult for the USD to erase its losses and helped XAU/USD preserve its
bullish momentum.
• The US Bureau of Economic Analysis (BEA) reported that the real Gross
Domestic Product expanded at an annualized rate of 6.5% in the second
quarter.
• This reading missed the market expectation of 8.5%. Additionally, the US
Department of Labor announced that there were 400,000 initial claims for
unemployment benefits in the week ending July 24, compared to analysts’
estimate of 380,000.

14. US Stocks And Some Hawkish Fed
Commentary
• Finally, the BEA announced on Friday that the Core Personal Consumption
Expenditures (PCE) Price Index edged higher to 3.5% on a yearly basis in June.
• This print came in lower than the market expectation of 3.7% and failed to trigger a
noticeable market reaction.
• Nevertheless, falling US stocks and some hawkish Fed commentary provided a
boost to the USD ahead of the weekend and XAU/USD reversed its direction.
• St. Louis Fed President James Bullard argued that the Fed should start reducing
asset purchases this fall and added that he expects to see the initial rate hike in the
last quarter of 2022.
• Furthermore, profit-taking on the last trading day of the month could also have
played a role in gold’s weakness on Friday.

15. ISM’s Services PMI report
• On Monday, the ISM will release the Manufacturing PMI report for July.
• Although the business activity in the manufacturing sector is expected to
continue to expand at a robust pace, the Prices Paid Index component of the
survey will be watched closely by market participants and a reading above 90
could revive inflation concerns and help the USD gather strength.
• The same goes for the ISM’s Services PMI report, which will be published on
Wednesday.

16. The GBP/USD Pair
• On Thursday, the weekly Initial Jobless Claims will be the only data featured in the US
economic docket. In the meantime, the Bank of England will announce its monetary policy
decisions.
• It’s difficult to say if this event can have a direct impact on gold’s valuation but a sharp
movement in the GBP/USD pair could affect the USD demand.
• On Friday, the US Bureau of Labor Statistics will publish the Nonfarm Payrolls data for
July.
• FOMC Chairman Jerome Powell said that they have some ground to cover on the labor
market side with regards to “substantial further progress.”
• A stronger-than-expected reading could cause investors to price a hawkish
policy outlook and lift the USD against its peers and vice versa.

17. The Relative Strength Index (RSI) Indicator
• Following Friday’s decline, the Relative Strength Index (RSI) indicator on the
daily chart retreated to 50, pointing to a loss of bullish momentum.
• Additionally, gold closed the week below the critical 200-day SMA after rising above that
level on Thursday, suggesting that buyers are struggling to remain in control.
• In the near term, the pair seems to be poised to move sideways between the 100-day SMA
and 200-day SMA but the market reaction to Friday’s US jobs report could cause it to break
out of that range.
• On the upside, the initial resistance is located at $1,820 (200-day SMA) ahead of $1,830
(50-day SMA) and $1,845 (static level).
• Supports, on the other hand, are located at $1,810 (20-day SMA), $1,800 (100-day SMA,
psychological level, Fibonacci 50% retracement of the April-June uptrend) and $1,790
(July 23 low).

18. Gold Technical Outlook

19. Gold Sentiment Poll

20. XAU/USD Eyes Deeper Losses If
$1805 Support Caves In

21. Thanks for listening
XAU/USD Eyes Deeper Losses If $1805 Support Caves In