- The yellow metal was bolstered by upbeat sentiment and a weak US dollar.
- Gold’s rally could be short-lived as US Treasury yields rise, a headwind for XAUUSD prices.
- Gold Price Forecast (XAUUSD): Could rally towards $1760 before continuing lower.
Gold (XAU/USD) bounces off multi-month lows around $1,730 and rises during the American session as recession fears fade and investors applaud China’s stimulus. At the time of writing, XAUUSD is trading at $1,741.48 a troy ounce, slightly up 0.17%.
Positive Sentiment and USD Weakness Drive Gold Demand
Global equities are rising as the latest Federal Reserve monetary policy minutes have further cemented the case for a 75 basis point rate hike in July, and the USD retreats from two-year highs, as the US dollar index shows, again below 107,000. The price of the yellow metal has eased, although any move higher could be capped by rising US Treasury yields, as the 10-year yield rose four basis points to 2,970%.
On Monday, rumors that the US could lift tariffs on Chinese goods remain that way. A senior US State Department official said no announcement is expected from Secretary Blinken at his meeting with Chinese Foreign Minister Wang Yi. Earlier during the Asian session, according to Bloomberg, China was considering allowing local governments to sell $220 billion of special bonds in an infrastructure program, which changed sentiment positively, weighing on the US dollar.
Meanwhile, on the US economic docket, Initial Unemployment Claims for the week ending July 2 were released, rising by 235,000, up from 230,000, and up 4,000 from 231,000. of the previous week. The report shows some moderation in the tense job market, as jobless claims have been the highest since January. At the same time, the trade balance showed that the deficit shrank to -85.5 billion dollars, compared to -86.7 billion the previous month, thanks to an increase in exports.
In the week ahead, the US calendar will feature speakers from the Fed, with Christopher Waller and St. Louis Fed President James Bullard. On Friday, the report on the US non-farm payrolls, and the president of the New York Fed, John Williams.
Gold Price Forecast (XAUUSD): Technical Outlook
From a daily chart perspective, the XAU/USD trend is down. However, oscillators moving around oversold territory, with the RSI at 27.27, could open the door for traders to take profits before the weekend. If this scenario plays out, the first resistance for XAUUSD would be the Dec 15, 2021 low at $1,752.35, followed by the Jul 5 daily low at $1,763.82, before resuming the downtrend.
Additional technical levels
Source: Fx Street
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