Gold's current price is hovering around $1,937-38, marking a three-week high. This stagnation results from traders anxiously awaiting cues on the US Federal Reserve's (Fed) forthcoming decisions, especially in light of recent negative US data. Indications of a dovish bias from the Fed would significantly impact the precious metal's trajectory.
The evolving US-China relationship presents another challenge for the XAU/USD bulls. US Commerce Secretary Gina Raimondo's recent critiques concerning difficulties faced by American companies in China have been met with disapproval. Concurrently, traders are observing key US indicators, such as the US ADP Employment Change and the final reading for the Q2 Gross Domestic Product (GDP).
Internationally, the International Monetary Fund's (IMF) intent to exercise caution when allocating Special Drawing Rights (SDRs) in the coming days, given rising interest rates and inflation, affects market dynamics. Moreover, with the S&P 500 Futures finding it challenging to maintain its growth and the US Dollar Index steadying after a six-week dip, the overall economic landscape appears mixed.
From a technical perspective, gold's ability to breach a monthly resistance line and the 200-SMA indicates a bullish sentiment. However, the overbought RSI and the 50% Fibonacci retracement level of its recent decline suggest hurdles ahead. If gold can surpass these challenges, the next key resistance lies at the 61.8% Fibonacci ratio or $1,948. A drop below the current support of $1,932-30 could attract sellers, although an ascending trend line around $1,817 acts as a strong bearish barrier.
In the Forex market, the price of gold directly impacts currency values, especially the US dollar. Forex traders often use gold as a hedge against currency fluctuations, so any movement in XAU/USD influences Forex strategies. Given the potential dovish stance from the Fed, Forex traders anticipate a weaker dollar, further enhancing gold's allure as a safe haven. It's crucial for Forex traders to stay updated on gold's price trend as it provides insights into potential shifts in major currency pairs. Any change in the gold market inevitably echoes through the Forex landscape, making it essential for both Forex and crypto traders to monitor these developments.