- XAU/USD rises toward $1260 lacks a follow-through.
- Lack of fresh developments surrounding trade conflict keeps investors on edge.
- Gold remains on track to record gains for the week.
With the knee-jerk reaction to the mixed macroeconomic data releases from the United States, the XAU/USD pair rose to a fresh session high above $1259 but quickly retraced its gains and was last seen trading at $1256 where it was down $1.5, or 0.11% on the day.
Although the nonfarm employment growth came in at 213K in June to surpass the market consensus of 195K, the US Dollar Index failed to gather momentum as the wage inflation data disappointed with the average hourly earnings increasing 0.2% to miss the experts’ estimate of 0.3%. The DXY slumped to its lowest level in three weeks at 93.64 and was at 93.68 as of writing, losing 0.5% on a daily basis.
Regardless of the USD sell-off, the CME Group FedWatch Tool’s rate hike odds rose to 80% for September, suggesting that investors are likely to continue to price another 25 bps rate hike in September, which could limit the DXY’s losses.
On the other hand, the choppy trading action witnessed in Wall Street points to a mixed market sentiment. Investors are waiting for fresh developments on the trade front.
On a weekly basis, the XAU/USD pair remains on track to close in the green after recording heavy losses in the previous three weeks.
Technical levels to consider
On the upside, the pair could meet the first resistance at $1260 (Jul. 4 high) ahead of $1265 (20-DMA) and $1272 (Jun. 24 high). Supports are located at $1252 (daily low), $1245 (Jun. 28 low) and $1239 (Jul. 2 low). Meanwhile, the CCI indicator on the daily chart is moving sideways near the 0 mark, pointing to a neutral price action in the short-term.
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