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XAU/USD treads water near $1,800, bearish bias stays intact


27 July 2021

The XAU/USD pair closed the first day of the week in the negative territory. Although the US Dollar Index edged lower, the risk-positive market environment made it difficult for gold to find demand. Ahead of Tuesday's key macroeconomic data releases from the US, the pair is moving sideways and was last seen trading flat on the day at $1,798.

Later in the session, the US Census Bureau will release the Durable Goods Orders for June. However, investors could remain on the sidelines and show no reaction to this report while waiting for the FOMC to announce its monetary policy decisions on Wednesday.

Previewing the data, "estimates for Durable Goods Orders are likely too high, as past misses on this release and disappointments in other figures for June allude to," said FXStreet analyst Yohay Elam. "The market reaction will likely be muted ahead of the Fed – apart from a minor mean-reversion – but the data would be useful for trading GDP on Thursday."

Durable Goods Orders Preview: Why expectations could be too high, data useful for trading GDP. The Conference Board's Consumer Confidence Index for July and Richmond Fed Manufacturing Index will be featured in the US economic docket as well. On Wednesday, market participants will look for clues regarding the timing of asset tapering in the Fed's Monetary Policy Statement. Moreover, FOMC Chairman Jerome Powell's remarks on the policy outlook amid renewed concerns over the coronavirus Delta variant hurting the recovery will be looked upon for fresh impetus.

Gold Futures: Scope for further downside

With Tuesday's subdued trading action, key technical levels remain intact for gold. Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart continues to edge lower toward 40, suggesting that the near-term outlook remains bearish.

Currently, gold is trading a tad below the 100-day SMA at $1,800 and sellers are likely to remain in control unless the price manages to hold consistently above that level. On the downside,  $1,790 (July 23 low) aligns as the next target ahead of $1,775 (Fibonacci 61.8 retracement of April-June uptrend).

On the other hand, $1,820 (200-day SMA) aligns as key resistance before $1,830/$1,833 area (Fibonacci 38.2% retracement, 50-day SMA).

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