- Gold broke below last week’s horizontal range on Tuesday.
- XAU/USD seems to have formed near-term support at $1,750.
- Broad-based USD strength makes it difficult for gold to stage a decisive rebound.
Following last week’s consolidation, gold traded in a relatively tight range on Monday. However, rising US Treasury bond yields and the renewed USD strength forced XAU/USD to extend its slide to its lowest level since mid-April at $1,750.
Additionally, technical buying pressure seems to have strengthened after gold broke below the lower limit of last weeks range at $1,760. Although the pair erased a portion of its daily losses, it remains on track to post heavy daily losses and was last seen losing 0.83% on the day at $1,763.
During the European trading hours, the 2% increase seen in the benchmark 10-year US Treasury bond yield provided a boost to the greenback. Reflecting the broad-based USD strength, the US Dollar Index (DXY) climbed to an eight-day high of 92.19. At the moment, the DXY is up 0.22% at 92.08.
Meanwhile, the data from the US showed that the Conference Board’s Consumer Confidence Index improved to 127.3 in June from 120 in May. This print surpassed Reuters’ estimate of 119 and helped the USD preserve its strength.
There won’t be any high-tier macroeconomic data releases in the remainder of the day and the USD’s market valuation is likely to remain the primary driver of XAU/USD’s action. On Wednesday, the Consumer Price Index (CPI) report from the euro area and the ADP Employment Change data from the US will be looked upon for fresh impetus.
Assessing gold’s outlook, “we expect gold to resume its downward trend this week as risk sentiment firms and markets continue to look towards the prospects of tightening monetary conditions from the Fed,” said OCBC Bank analysts.
Gold Price Forecast: XAU/USD to continue suffering bearish pressure this week – OCBC.
On the daily chart, the Relative Strength Index (RSI) indicator dropped to 30, suggesting that gold could make a technical correction before the next leg down. On the downside, near-term support seems to have formed at $1,750. A daily close below that level could open the door for additional losses toward $1,730, where the static support from early April is located.
On the other hand, the initial hurdle aligns at $1,785 (upper limit of last week’s consolidation channel) ahead of $1,790 (100-day SMA) and $1,800 (psychological level, Fibonacci 50% retracement of April-June uptrend). Unless XAU/USD manages to clear this last resistance, sellers are likely to remain in control.
