Gold price lost momentum near $1,920 and remains below the 50-hour and 100-hour moving averages. The USD gained strength due to the narrative of "extended period of high interest rates," putting pressure on gold. The first resistance is at $1,945, while the initial support sits at $1,915.
During the early European session on Monday, gold price (XAU/USD) lost traction near $1,920. Meanwhile, the US Dollar Index (DXY) attracted some buyers and hovered around 105.60, close to its highest level since March 2023.
However, the argument for an extended period of high interest rates in the US continues to be the primary driver of a stronger dollar, thereby weighing down on gold. It's worth noting that rising interest rates increase the opportunity cost of holding non-yielding assets, which means the outlook for gold is not optimistic.
Looking ahead, traders will closely monitor the US Q2 Gross Domestic Product (GDP) annualized figure released on Thursday and the Core Personal Consumption Expenditures (PCE) Price Index published on Friday, which is the Federal Reserve's preferred gauge of consumer inflation. The expectation is for the year-on-year data to decrease from 4.2% to 3.9%. Market participants will seek clues from these figures to determine a clear direction for gold.
Technical Outlook:
On the 4-hour chart, gold price remains below the 50-hour and 100-hour EMA, indicating minimal downside resistance. At the same time, the RSI is in the bearish territory below 50, initiating a downward momentum for gold.
Resistance levels: $1,945, $1,970, and $1,985
Support levels: $1,915, $1,900, and $1,885
(Source: FXstreet)
