Gold bounces back from an intraday low and confirms a two-day downtrend.
During the quiet session, a stronger US dollar impacts on commodities.
To support the bears, covid, Sino-American headlines join mixed Fedspeak.
This Week’s Chart: Gold collides with a significant milestone
As European markets prepare for Tuesday’s bell, gold (XAU/USD) recovers $1,778 after bouncing from an intraday low. Nonetheless, despite the bearish technical configuration, the strength of the US dollar and difficulties to risk appetite kept gold sellers optimistic.
The US dollar index (DXY) falls to 91.90, reversing two days of gains. Although the dollar index appears to be weighed down by the pre-EU open consolidation, greenback bulls are aided by stronger US Treasury yields.
The previous day’s bond yields were dragged by mixed remarks from US Federal Reserve (Fed) policymakers and dismal Dallas Fed Manufacturing Index statistics. Fresh optimism about US President Joe Biden’s stimulus program, as well as comparably better coronavirus (COVID-19) circumstances in the US compared to Asia-Pacific and the UK, are supporting Treasury yields, which have dropped the most in a week.
Wellington is considering dropping the covid alert after a protracted absence of new viral infections, while pandemic conditions in Australia appear to be worsening. On the similar note, on Monday, the United Kingdom recorded the greatest number of infections since January 30.
The Federal Reserve has been speaking in a cautious and defensive tone recently, but Friday’s Core PCE Inflation report reignited concerns that the US central bank has to normalize its loose money policies. “The Fed has made substantial more progress against the inflation goal,” Thomas Barkin, President of the Richmond Federal Reserve Bank, stated on Monday.
Meanwhile, US Secretary of State Antony Blinken’s remarks on China weighed on market mood and put a safe-haven premium beneath the US dollar, putting gold prices under pressure. Blinken’s most recent remarks were, “When it comes to ties, China is ‘complex.’ No one is being asked to choose between China and the United States.”
S&P 500 Futures, as well as Asia-Pacific stocks, continue under pressure against this backdrop. For new impetus, traders are looking for new clues from the US CB Consumer Confidence Index for June, as well as more comments from Fed policymakers, not to mention Wednesday’s China official PMI.
Although the strengthening of US statistics may put downward pressure on gold, bears may be wary ahead of Friday’s US Nonfarm Payrolls report (NFP).
Gold fades the previous day’s breakout of the two-week-old falling trend line, despite gloomy MACD signs. The 50-SMA and a declining resistance line from June 18 are also posing problems for gold sellers.
The latest bounce, however, should be ignored until it stays below the $1,782 resistance line, with the possibility of a struggle to the 50-SMA level of $1,780 not being ruled out.
However, a clean breach of $1,782 will aim for the $1,800 level, while any additional upside would be capped by the prior support line from June 04, which is located around $1,827.
The immediate resistance-turned-support line near $1,769, on the other hand, holds the key to gold’s new downside objective of $1,761.
March’s high around $1,755 may test the gold bears before sending them to the mid-April lows near $1,723, if the price continues to fall below $1,761.

Bearish trend
Gold Price Prediction: XAU/USD will remain on the back foot below $1780 due to the risk-off environment.
Analysis of the gold price: Gold is trading flat between $1770 and $1790 per ounce.
USDX and Gold: The Prey and the Hunter
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