XAU/USD struggles around $1,860, upside looks likely on weak DXY

  • The price of gold is hovering around $1,860.00 amid broader DXY weakness.
  • Market participants are abandoning the DXY on weaker US NFP forecasts.
  • The formation of a symmetrical triangle indicates a consolidation move in the future.

The price of gold (XAU/USD) saw a strong rebound after failing to hold below the round support level of $1,850.00 in early Tokyo. The precious metal hit an intraday high of $1,860.25 and is expected to refresh the day’s high as an improvement in market participants’ risk appetite diminished the attractiveness of the US Dollar Index ( DXY).

A slippage in the DXY could be tied to a weaker US Nonfarm Payrolls (NFP) forecast, which is due later this week. A preliminary estimate for the US NFP is 310,000 versus the previous print of 428,000 last month. This dictates an expectation of a fall of more than 27% in the number of job creations by the American economy. A slippage in the data on additional job creation could reduce the Federal Reserve’s (Fed) monetary policy stance in June. And, ultimately, this will support gold prices.

Additionally, the US Economic Calendar offers the release of ISM Manufacturing PMI data, which could slip to 54.5 from 55.4 previously.

Gold technical analysis

A formation of a symmetrical triangle on an hourly scale indicates a shift in volatility, which will be followed by a breakout of the same. Gold prices are set to break higher amid a golden crossover of the 50 and 200 period exponential moving averages (EMA) at $1,837.42. The Relative Strength Index (RSI) (14) is hovering in a range of 40.00 to 60.00 indicating further consolidation ahead.

Gold hourly chart