Technical Analysis

GOLD Price Analysis – Aug 07, 2023

By LonghornFX Technical Analysis
Aug 7, 20232 min
Signal 2023 05 25 122622 002

Daily Price Outlook

XAU/USD fails to leverage post-NFP rebound from a multi-week trough.

After an initial ascent to nearly $1,946 during Monday's Asian trading window, gold encounters selling pressure, resulting in a new daily low during the final trading hour. Currently, XAU/USD is hovering around the $1,940 mark, indicating a temporary halt in its modest recovery from Friday's level, the lowest recorded since July 11th.

In July, the US economy persisted in job creation at a significant rate, as highlighted in the closely watched monthly employment report. However, the downward revisions for May and June data hint at a softening demand for labor.

Yet, robust wage growth coupled with an unexpected dip in unemployment signals a persistently tight labor market. This bolsters market sentiment that the Federal Reserve (Fed) will sustain higher interest rates for an extended period, which in turn provides a lift to USD, enticing dip-buyers as the new trading week commences. A robust dollar is perceived to exert downward pressure on gold prices denominated in US dollars.

Looking ahead, the absence of any significant market-moving economic data from the US slated for Monday's release implies that traders will pay close attention to speeches from key Fed officials. These could sway US bond yields and USD demand. Besides, prevailing risk sentiment could offer some direction to gold prices. However, in the current landscape, bears seem to have an upper hand, fueling anticipation for an extension of the downtrend that has been in play for over a fortnight.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD(XAU/USD) - Technical Analysis

Gold prices have recently engaged the crucial resistance level at $1945.20, yet have managed to maintain their stability below this level. This threshold acts as a significant obstacle to positive price fluctuations.

Notably, the Stochastic Oscillator indicates evident overbought conditions at present, which may potentially trigger a return to the anticipated intraday bearish wave, targeting the next level at $1913.15.

The 50-day Exponential Moving Average (EMA50) reinforces the likelihood of the projected bearish trend, a prediction that will stand as long as the price sustains below the $1945.20 level.

It should be noted that a breakthrough of the proposed target might instigate further losses for the price, potentially driving it towards $1893.00.



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