Gold Forecast: XAU/USD hits 2-week high around $1,775 on weak US PMI

• The price of gold advances due to the fall in US Treasury yields and the weakness of the dollar.
• US equities rise despite cooling manufacturing data, illustrating that the Fed’s actions are making themselves felt.
• Fed policymakers oppose a “moderate” tilt, based on market reaction.
• Gold Price Forecast (XAUUSD): If Buyers Regain $1,800, Bias Changes to Neutral Upside; otherwise, a leg down to $1,730 is feasible.

the price of gold rises for the fourth day in a row, extending its ongoing rally. The US dollar remains weak, undermined by falling US Treasury yields, as investors assessed that the Federal Reserve could raise rates, but not as aggressively as expected. At the time of writing, XAUUSD is trading at $1,771.15, up 0.32%.

US ISM stubbornly in expansion territory, price index down from 78.5 to 60

European and US stocks fluctuate, reflecting fragile sentiment. Meanwhile, tensions between China and the US, with the visit of the Speaker of the US House of Representatives, Pelosi, increased military activity by China. That dragged European stocks lower, while traders are bullish on the Fed’s “dovish” tilt as perceived by markets, which was bolstered by weaker US PMI readings.

The Institute for Supply Management (ISM) reported that July’s manufacturing PMI remained in expansion territory, beating estimates. However, it was below June’s reading, while some components, such as new orders, fell, while the price index tumbled, showing signs that the rise in interest rates is starting to bite.

Meanwhile, Minnesota Fed President Neil Kashkari commented that he was surprised by the markets’ reaction that the Fed would start “backing off” soon and said a 50 basis point rate hike at upcoming meetings would be reasonable. . He added that higher core inflation readings would push him to another 75 basis point rise.

That said, XAUUSD prices surged to fresh four-week highs around $1,775.39, bolstered by broad US dollar weakness. The US Dollar Index (DXY), a gauge of the dollar’s value against six currencies, fell to 105.427, shedding 0.38%, undermined by falling US Treasuries across the yield curve. Additionally, real yields, as represented by the yield on 10-year inflation-protected US Treasury bonds (TIPS), are at 0.109%, down from yearly highs of 0.893%, a headwind. against for the rise in gold prices.

What must be considered

JOLTs job openings will be announced on the US calendar, and Chicago Fed President Charles Evans will make remarks.

Gold Price Forecast (XAUUSD): Technical Outlook

XAUUSD remains neutrally biased despite breaking above the $1,750 figure as buyers set their sights on resistance shifted to the May 16 low at $1,787.03. If gold buyers recover from the aforementioned, that will open the door for a test of the 100 day EMA at $1,795.16, followed by $1,800. A break of the latter would screw up the bias to neutral to the upside. Otherwise, a correction of the XAUUSD towards the 20-day EMA at $1,730.84.