Gold prices rebounded from three-week lows but are poised for their biggest weekly decline since mid-June.
A stronger US dollar affects the price of XAU/USD.
Mostly optimistic US data, Chinese sentiment and US Treasury bond yields have pushed the US Dollar higher, favoring gold sellers.
US Dollar SWOT
STRENGTH - "US ISM Services PMI" data is seen to have dropped to 52.7 for July compared to 53.9 previously. A detailed report of the data has shown that the Employment Index and New Order Index have shown weakness, but Costs Paid have jumped to the highest level in three months.
Additionally, “US Factory Orders” rose by 2.3% MoM for June compared to 0.4% previously, while “Jobless Claims” matched market expectations of 227K for the week ending July 28 from 221K previously.
Furthermore, the preliminary reading of "Nonfarm Productivity" data for the second quarter (Q2) has increased by 3.7% compared to the previous reading which recorded -1.2%, while "Unit Labor Cost" decreased to 1.6% for the same period compared to 3.3% previously.
WEAKNESSES - "US policymakers" are seen to have acted to defend the country's treasury bonds, after "Fitch Ratings" lowered the US credit rating to AA+ from AAA.
OPPORTUNITY – Based on the employment data component (ADP, JOLTS) that was released earlier this week, the initial signal for the employment report has shown a positive sign, "Nonfarm Payrolls (NFP)" is predicted to be 200,000 - 210,000 compared to 209,000 previously. The unemployment rate will remain stable at 3.6%.
If the NFP data is released tonight as expected it will give a sign that the US labor market is seen to be stable and strong despite having experienced 11 interest rate hikes by the Federal Reserve in 16 months.
THREAT – Tensions in US-China bilateral relations are seen to continue, concerns over slow economic growth in China, have influenced XAU/USD sentiment.
Recently, members of the main US Republican party have urged President Biden to impose broad restrictions on US investment in China.
On the other hand, the Governor of the "People's Bank of China" Pan Gongsheng, has met with the largest real estate developer in China and has assured to provide the necessary assistance to defend the country's housing sector.
Technical Analysis of Gold Price
The price of Gold yesterday closed below the $1,940 level, at the same time giving a sign for gold to find "support" around the $1,920 price level as a "confluence buyer".
But if "Bearish" is so strong, $1,910 will be the focus.
If tonight's NFP data release is seen otherwise, "Bullish" can be seen breaking through the price level of $1,950 at the same time making $1,970 the next "Resistance" target.
