02 August
Gold and silver news
Gold price gained some positive momentum during the Asian session on Wednesday, reversing a part of the previous day’s sharp decline to the $1,941 area, which marked a three-week low. However, the XAU/USD struggled to capitalize on the intraday uptick and is currently trading just below the $1,950 level, still up over 0.20% for the day.
Fitch downgraded the US Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’, citing expected fiscal deterioration over the next three years, erosion of governance, and a growing general debt burden. This announcement dampened investors’ appetite for riskier assets, leading to a modest decline in US equity futures and offering support to the traditional safe-haven Gold price. Additionally, intraday selling of the US Dollar (USD) also acted as a tailwind for the XAU/USD.
The downside for the USD, however, remains cushioned for now due to increasing expectations of one more 25 basis points (bps) rate hike by the Federal Reserve (Fed) in September or November. Fed Chair Jerome Powell mentioned last week that the economy still needs to slow and the labor market to weaken for inflation to credibly return to the 2% target. Furthermore, incoming US macro data indicates an extremely resilient economy, further supporting prospects for additional tightening by the Fed.
Traders are now looking forward to the US economic docket, which includes the release of the ADP report on private-sector employment during the early North American session. This release might influence USD price dynamics, which, along with the broader risk sentiment, could provide fresh impetus to the Gold price. However, all eyes will be on the closely-watched US monthly employment details, known as the NFP report, scheduled for Friday. In the meantime, the XAU/USD is likely to continue its range-bound price action.
Technically, prices have failed for the second time to cross the trend line between the highs of May 4th and July 20th, creating a strong resistance area around $1,976. On the downside, support is placed at $1,935 and $1,929. The RSI is tilting downwards, but the slope is still positive, and any reading above 56 will bring back bulls in the game. The ADX at 15 points indicates range-bound movement.
