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Gold Price Outlook: XAU/USD May Find Support if US Sentiment Data Disappoints

Gold Price Outlook: XAU/USD May Find Support if US Sentiment Data Disappoints

Daniel Dubrovsky, Strategist

Gold, XAU/USD, Conference Board Consumer Confidence, IGCS, Technical Analysis - Talking Points:

  • Gold prices marked time on Monday despite Treasury yields declining
  • XAU/USD may remain afloat if Conference Board sentiment disappoints
  • The near-term technical gold outlook seems biased to the upside for now

Anti-fiat gold prices marked time to wrap up the first day of the new trading week. The yellow metal was unable to materially capitalize on broad weakness in Treasury yields, something that can at times benefit XAU/USD. Resilience in the US Dollar likely kept gold at bay. The anti-risk currency might have seen some demand as cyclically-oriented stocks underperformed the broader market on Monday.

This follows the Fed’s economic policy symposium from last Friday, where Chair Jerome Powell’s trepidation about the labor market underscored a dovish tilt. Moreover, the central bank highlighted that while tapering is just around the corner, actual rate hikes are still some ways off. This is what likely weakened US government bond yields, which extended losses from the end of last week.

Over the remaining 24 hours, the yellow metal may be closely eyeing US Conference Board Consumer Confidence data. The index is expected to decline to 123.0 in August from 129.1 prior amid surging Covid cases fueled by the more contagious Delta strain. A softer-than-expected outcome may further push back 2022 Fed rate hike bets, keeping XAU/USD afloat.

Check out the DailyFX Economic Calendar for more key events!

Gold Technical Analysis

XAU/USD closed above a near-term falling trendline from May, opening the door to further gains. Confirmation of the breakout is arguably lacking though. Still, a bullish crossover between the 20- and 50-day Simple Moving Averages (SMAs) may form in the coming days. That may hint at further gains, placing the focus on immediate resistance at 1834, which is the July high.

XAU/USD Daily Chart

Gold Price Outlook: XAU/USD May Find Support if US Sentiment Data Disappoints

Chart Created Using TradingView

Gold Sentiment Analysis

According to IG Client Sentiment (IGCS), about 68% of traders are net-long gold. Upside and downside exposure amounts over a daily basis remain unchanged. We typically take a contrarian view to crowd sentiment. Since the majority of investors are net-long gold, prices may continue falling. However, recent shifts in positioning are offering a mixed trading bias.

Gold Price Outlook: XAU/USD May Find Support if US Sentiment Data Disappoints

*IGCS chart used from August 31st report

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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