Gold Price Analysis: XAU/USD extends Friday’s weakness below $2,030

Gold drops to $2,027 amid the initial Asian trading session on Monday. The yellow metal’s latest declines can be considered as an extension to Friday’s losses that were the biggest in two months. Although coronavirus (COVID-19) concerns to keep the bullion’s safe-haven demand intact, the recent strength in the US dollar could be cited as the reason behind the fresh fall.

Is it the much-needed move?

Having surged more than 11% in July, gold buyers are likely getting tensed during early August. The reason could be traced from the US dollar’s latest U-turn from the lowest in two years.

The greenback initially gained momentum as the executive orders sanctioning Hong Kong leader Carry Liam and banning business with TikTok and WeChat triggered the rush to risk-safety. The moves gained additional strength after July month employment data from the US managed to defy further pessimism, even not marking much optimism. US NFP for grew 1.763 million while the Unemployment Rate stood at 10.2% during Friday’s reading.

The moves gained an extra boost as US President Donald Trump signed four other executive orders during the weekend. These four orders attack the stimulus deadlock by allowing $400 unemployment benefits, stopping house evictions for those living in rented houses with federal financial support and ease recovery of student loans.

Against this backdrop, Wall Street struggled to keep the bulls happy as Nasdaq dropped after declines in tech shares. Though, the US 10-year Treasury yields managed to stay positive near 0.56%. Currently, S&P 500 Futures drops 0.07% to 3,344 by the press time.

Looking forward, China’s July month inflation data may decorate the economic calendar but the absence of Japanese traders could curb the market volatility. Though, risk catalysts are less likely to be ignored. Among them, the Sino-American tension and virus news will gain major attention.

While the present weakness in the yellow metal keeps sellers hopeful, bulls are still in the driver's seat as neither the pandemic is over nor the bullion trades below $2,000.

Technical analysis

An ascending trend line from July 21, at $2,030 offers immediate support to the bullion ahead of $2,000 psychological magnet. On the upside, 61.8% Fibonacci Expansion (FE) of 2001-2011, near $2,077 becomes the key resistance holding the gate for further north-run towards the $2,100 threshold. #gold##XAU/USD#

Reprinted from Fxstreet，the copyright all reserved by the original author.