XAUUSD needs to clear $1,780 to extend rebound
Following a consolidation phase above $1,700 at the beginning of the week, gold gathered bullish momentum and climbed to its highest level since early July above $1,760. Although the yellow metal lost its bullish momentum on Friday, it managed to close the second straight week in uptrend. Its near-term technical outlook points to a bullish tilt. And XAUUSD looks to extend its recovery ahead of the July jobs report from the US. In this article, we’ll detail XAUUSD (Gold) Weekly Technical Forecast for Aug 1st – 5th.
What happened last week?
The data from the US aggravated recession fears earlier in the week. This caused investors to hold back from taking huge positions before the US Federal Reserve’s policy announcements. The headline General Business Activity Index of the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey dropped to -22.6 in July from -17.7 in June.
On Tuesday, the Conference Board (CB) reported that the Consumer Confidence Index declined to 95.7 from 98.4 in June. “Inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months,” the CB noted in its publication.
On Monday, the ISM Manufacturing PMI data from the US will be watched closely by market participants. In case this print arrives below 50, the USD is likely to have a difficult time finding demand. conversely, an upbeat reading by itself might not be enough for investors to reassess the Fed’s rate outlook. The ISM will also release the Services PMI report on Wednesday. The S&P Global’s Services PMI fell to 47 in July’s flash estimate from 52.7 in June. This points to a contraction in the service sector’s business activity. The dollar weakened against its major rivals after this data. A similar market reaction could be witnessed if the ISM’s Services PMI falls into the contraction territory.
Gold technical outlook
The Relative Strength Index (RSI) indicator on the daily chart climbed above 50 and XAUUSD closed the last two trading days above the 20-day SMA, pointing to a bullish tilt in the near-term technical outlook. On the upside, $1,780 (Fibonacci 23.6% retracement of the latest downtrend, the descending trend line) aligns as initial resistance. In case buyers manage to flip that level into support, $1,800 (psychological level 50-day SMA) and $1,830 (Fibonacci 38.2% retracement) could be seen as the next bullish targets.
On the downside, $1,740 (20-day SMA) forms first support before $1,700 (psychological level) and $1,680 (July 21 low, static level from March 2021).
Gold forecast poll
There is an obvious bullish shift in gold’s short-term outlook with a majority of polled experts seeing the price continuing to rise next week. The average target on the one-week view sits at $1,799. The one-month view paints a mixed picture with one-third of analysts remaining bearish on gold.
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