Gold falls on US Dollar Strength – Consumer Confidence on Focus

  • XAU/USD remained low and stayed in a bearish mood.
  • The gold price is under new selling pressure as USD demand rises.
  • Upcoming ISM Manufacturing and Services PMI will decide the direction.
  • $1800 is still acting as a critical support level for the yellow metal.

GOLD Fundamental Analysis

XAU/USD is trading at $1,811.63, down by 0.31% in the previous 24 hours. Gold prices remained in a narrow range as fears about increasing interest rates rose in the market.

Rising Dollar Demand

According to recent data, headline orders for durable goods declined by 4.5% in January. However, orders excluding transportation goods climbed by 0.7% during the reporting month, outweighing the setback.

Moreover, numerous Fed policymakers stress the importance of raising interest rates to reduce inflation. It supports rising US Treasury bond rates while driving flow away from the non-yielding Gold price. United States 10-Year Bond Yield also raised by 0.65 % in 24 hours, trading at 3.947.

Therefore, stronger-than-expected economic statistics, high inflation numbers, and expectations of further rate hikes have increased the demand and price of the Dollar. The Dollar Index increased by 0.06% to 104.74 and weighed on gold.

Economic data this week

The upcoming significant US macroeconomic report will be the Consumer Confidence Survey for February.

Furthermore, the ISM will report the Manufacturing PMI and the Services PMI on March 1 and 3, respectively, which might be the most crucial releases of the week. The last three months have seen a decline in the US Manufacturing PMI. The data may drop once more, but it will be on a lesser scale.

Gold traders will look at these reports this week to analyze the further direction of XAU/USD.

Gold Technical Analysis

Gold Technical Analysis

The Daily Technical Analysis of XAU/USD shows signs of possible bearish trend continuation in the short run. There are more chances of an extended downfall than a reversal. The dots of Parabolic SAR are appearing a little distant from the current price level, suggesting there is still room for a downtrend. Meanwhile, the gold price is currently moving in a descending channel and is away from the lower and upper bands, which means it might keep moving in the same direction.

Furthermore, the 20-Day Simple Moving Average has crossed the 50-Day SMA from above, suggesting heavy selling pressure. If the price keeps on falling, it will see initial support at the psychological $1800 level. Any break below this level would drag its prices further to the downside towards the next support at $1790. It is the same level where 100-Day SMA is resting.

On the bullish side, any break above the higher band of descending channel could give some ease to the yellow metal. Additionally, the technical indicators are all suggesting trend continuation for a while. The momentum indicator, Stochastic Oscillator’s %K and %D lines, have already reached the oversold region below the 20 levels. It suggests that gold prices might see some correction soon. However, the Moving Average Convergence and Divergence Histograms below the zero line suggest a bearish trend continuation.

Overall, the idea is to wait for the price to fall below the $1800 level and, if that happens, enter a short position in the market.

XAU/USD Daily Technical Levels:


Pivot Point: 1814.75                       

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