Gold confined to a familiar range, just above $1,700

• The gold price struggled to gain significant traction and remained confined to a range.
• Dollar profit-taking continued to lend some support to the commodity.
• More aggressive central banks and risk momentum acted as a headwind and capped gains.

the price of gold attracted some buying near the $1,705 region on Tuesday, though it seemed to struggle to capitalize on modest intraday gains. The XAU/USDthus far, has struggled to gain any significant traction and remained confined to a familiar trading range, just above the $1,700 round figure mark.

The price of gold received support from the sustained selling of the dollar

The US dollar continued its pullback from two-decade highs hit last week, which in turn was seen as a key factor offering some support to dollar-denominated gold. In fact, the dollar index fell to its lowest level since July 6, amid declining bets on a massive 100 basis point rate hike by the Federal Reserve in July. Several FOMC members recently signaled that they are likely to stick to a 75 basis point rate hike at the next policy meeting on July 26-27.

US housing market data did not impress dollar bulls

Mixed data from the US housing market, meanwhile, failed to impress dollar bulls or provide a significant boost to gold prices. The US Census Bureau reported that housing starts decreased 2%, to a seasonally adjusted annual rate of 1,685,000, while building permits fell 0.6% in the same period, after the contraction of 7 % registered in May.

Aggressive tightening plans by major central banks acted as a headwind

That said, the prospect of a more aggressive move by major central banks continued to act as a headwind for the yielding yellow metal. The Federal Reserve is still expected to carry out a bigger rate hike later this year to rein in rising inflation, which in June accelerated to a four-decade high. In addition, the European Central Bank (ECB) will discuss at its next monetary policy meeting on Thursday whether to raise interest rates by 25 or 50 basis points to curb inflation.

Separately, Reserve Bank of Australia meeting minutes, released on Tuesday, indicate that further interest rate hikes will be needed to bring inflation back to target over time. This comes a day after Bank of England policy maker Michael Saunders said the current tightening cycle may still have some way to go and the benchmark rate could reach 2% or more next year.

inflation fears

Risk appetite boost helped cap XAU/USD

This, coupled with a positive tone around equity markets, helped limit gains in safe-haven gold. The results of several major US banks have been generally strong. In addition, the recent decline in crude oil prices caused a modest rebound in investors’ appetite for riskier assets.

Gold Price Technical Outlook

The price of gold has so far struggled to post a significant recovery from the near one-year low it hit last week, suggesting short-term risks remain to the downside. Therefore, any recovery attempt beyond the immediate resistance at $1,725 ​​to $1,726 could be seen as a selling opportunity. This, in turn, should cap XAU/USD near the horizontal resistance of $1,734 to $1,735. Follow-up buying could trigger a series of short-covering moves and lift the commodity towards the $1,749 to $1,752 supply zone.

On the other hand, last week’s low around the $1,698-$1,697 area could continue to act as immediate support. A convincing break below would make XAU/USD vulnerable to testing the September 2021 low around the $1,787-$1,786 zone. The price of gold could extend the bearish trajectory towards the yearly low of 2021, near the zone of $1,677-$1,676.

Gold price: Downside risks remain intact