XAU/USD rebound eyes $1,830 ahead of Fed Minutes and US NFP

  • Gold extends Friday’s U-turn from five-month low amid sluggish session.
  • US dollar’s retreat, off in the US limit allowing bears to take a breather ahead of the key data/events.
  • Options market hints at bear’s dominance, recession fears also exert downside pressure.
  • Fed Minutes, US NFP appears key after recently mixed US data.

Gold Price (XAU/USD) picks up bids around $1,812 while stretching the previous day’s recovery from a multi-day low heading into Monday’s European session. In doing so, the metal rises for the second consecutive day as the US dollar buyers take a breather during the US holiday.

That said, the US Dollar Index (DXY) remains pressured around 105.00 after refreshing a two-week top the previous day. The DXY’s latest consolidation could be linked to the US Independence Day holiday and the market’s preparations for the week’s key data/events, including the week’s Federal Open Market Committee (FOMC) Minutes and the US Jobs report for June.

It should be noted that the gold price dropped to the lowest level in five weeks after the US ISM Manufacturing PMI data propelled recession woes on Friday. The US ISM Manufacturing PMI for June slumped to the lowest levels in two years, to 53.0 versus 54.9 expected and 56.1 prior.

Considering the data, analysts at the ANZ Bank said, “Surveyed data from both PMIs and the US ISM are all pointing to faltering orders growth, lower backlogs of work indices and softer production over the summer. It is hard to escape the growing growth pessimism, which is also fanning expectations of a peak in both inflation and central bank hawkishness.”

Elsewhere, the options market indicator called the risk reversal (RR), calculated by the difference between calls and puts, portraying a bearish bias as the daily RR dropped for the fourth consecutive day to -0.195, the lowest in over a week, whereas the weekly figure marked third negative in a row with -0.5000 level. Further, the monthly RR slumped to the lowest since February during June, to -1.220, marking a three-month fall.

While portraying the mood, the S&P 500 Futures drop half a percent while the US Treasury yields remain unchanged after the biggest weekly fall since February due to the US holiday.

Moving on, the US holiday may allow gold prices to consolidate recent losses but the bears remain hopeful ahead of Wednesday’s Federal Open Market Committee (FOMC) Minutes and the US Jobs report for June, up for publishing on Friday.

Technical analysis

A clear upside break of the three-day-old descending trend line hints at short-term recovery moves in the Gold Price. The hopes favoring corrective pullback also take clues from the firmer RSI and bullish MACD signals on the four-hour chart.

However, a convergence of the 100-SMA and 12-day-old descending trend line appears a tough nut to crack for the metal buyers, around $1,830 by the press time.

Alternatively, pullback moves need validation from the 23.6% Fibonacci retracement of June 12 to July 01 downside, near $1,806, to recall gold sellers.

Following that, the $1,800 threshold may act as an extra filter to the south before directing the bears towards the $1,780 and $1,760 static supports.

Gold: four-hour chart

Trend: Corrective pullback expected

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