GOLD price displayed a positive trend during the Asian session on Wednesday, recovering from the previous day’s decline to a three-week low at $1,941. Despite a modest uptick, XAU/USD struggled to break above the $1,950 level and remained up by over 0.20% for the day.
Fitch’s downgrade of the US Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘AAA’ to ‘AA+’ contributed to a decline in US equity futures and boosted demand for the safe-haven asset, Gold. Additionally, intraday selling pressure on the US Dollar (USD) further supported the XAU/USD.
However, the USD’s downside was limited due to expectations of another 25 basis points (bps) rate hike by the Federal Reserve (Fed) in either September or November. The Fed’s cautious stance on inflation and positive US economic data, including the Advance US Gross Domestic Product (GDP) report and factory production rebound, reinforced the likelihood of further monetary tightening.
Gold’s gains were also capped by expectations of additional rate hikes by the European Central Bank (ECB) and the Bank of England (BoE), along with potential policy changes by the Bank of Japan (BoJ).
Traders are closely monitoring the US economic docket, including the ADP report on private-sector employment and the highly anticipated Non-Farm Payrolls (NFP) report due on Friday, for further direction on Gold price movement.
From a technical perspective, GOLD Price found support near the 200-SMA but faces bearish indicators on the RSI and MACD. A clear break below $1,942 could pave the way for further downside towards the $1,935 support zone, while a convincing recovery above $1,973 may signal potential upside towards the $1,985 resistance level. The overall outlook for Gold Price remains cautious, with bears needing to breach the $1,935 support to gain control.
www.fxleaders.com