XAU/USD targets establishment above $1,810, Fed minutes at a glance

  • Gold price should balance above $1,810.00 on weaker DXY.
  • The pessimistic economic data from the US ISM has reinforced fears of recession.
  • Rising recession fears reduced the chances of an exceptional rate hike by the Fed.

The price of Gold (XAU/USD) is likely to breach the critical $1,810.00 hurdle and could settle above the same level as the US Dollar Index (DXY) has entered mode. patch. On Friday, the previous metal showed reactive buying action after hitting a new five-month low at $1,784.57. Usually, a reactive buy action in the asset indicates that the asset has become a value bet now.

A potential correction in the DXY on Friday led to a firmer rally in gold prices. Bearish data from the US Institute for Supply Management (ISM) bolstered the DXY bears. The US ISM manufacturing PMI landed at 53, below expectations and the previous print of 54.9 and 56.1 respectively. Apart from that, the employment index and the new orders index showed a vulnerable performance.

The downbeat economic data has triggered fears of recession in the US economy, which could reduce the chances of a one-off rate hike by the Federal Reserve (Fed) for its interest rate decision announcement in July. Going forward, the Federal Open Market Committee (FOMC) minutes will remain in focus, which is expected on Wednesday. This will provide a detailed view of the Fed’s decision making.

Gold technical analysis

On an hourly timescale, gold prices have broken through the critical hurdle of $1,805.44 and are hovering above the same. The asset broke through the 20 and 50 period exponential moving averages (EMA) at $1,803.57 and $1,807.30 respectively. It should be noted that the price of the asset is above the short-term EMAs while the 20-EMA is trading below the 50-EMA. This indicates that the buy action of the asset is much firmer. Meanwhile, the Relative Strength Index (RSI) (14) is trying to break through 60.00, which will cause the asset to rally again.

Gold hourly chart