The yellow metal was flat at the early opening of the week yesterday after starting to show gains at the close of trade last week following a retracement of the US dollar which failed to sustain the strengthening momentum following the release of the NFP data report.
The decline of the US dollar was seen to be influenced by the assessment of the gloomy NFP report while investors earlier this week were more cautious ahead of the release of the ISM survey data for the service sector in the United States (US) in the New York session tonight.
Although the US dollar showed a lackluster performance, investors remain cautious and expect the strengthening of the US dollar to continue for a longer period of time due to the expectation that the Federal Reserve (Fed) will continue to raise aggressive interest rates.
The re-strengthening of the US dollar which could be triggered at any time will again put pressure on gold trading.
The dollar index is also seen hovering in the latest 20-year high zone at 110.00 despite a slight retracement.
Examining the price movement on the XAU/USD chart which measures the value of gold against the US dollar at the beginning of the week, the price that moved back above the 1700.00 level was seen to be flat below the 1720.00 price barrier throughout Monday yesterday.
However, still signaling a bullish move, the price remained above the Moving Average 50 (MA50) support level on the 1-hour time frame on the XAU/USD chart until the close of the New York trading session yesterday.
Continuing on this morning's trading session in Asia, the price of gold managed to make a jump to test the level of 1720.00, but the jump failed to continue before the price shrank back below the barrier level in the European session.
For the next expected price movement, if the price succeeds in showing an upward pattern, it is expected that the price will rise up to the zone around 1740.00 which will be the initial resistance for the price after a clearer bullish movement signal.
The continued higher increase will lead to the zone around 1760.00 for the price to record the latest 2-week high level for gold.
On the other hand, if the price fails to maintain the momentum of the increase, the decline in price can be triggered again and if it breaks below the MA50 support level, investors will prepare for a lower fall in gold after the bearish signal.
The next price target for a lower decline is to reach around 1680.00 for the price of gold to record a recent 7-week low.
