Gold Price Forecast: XAU/USD balances above $1,740 as DXY extends downside, US NFP buzz

• Gold prices have climbed above $1,740.00 comfortably amid weakness in the DXY.
• Lower US NFP estimates and the downbeat US ISM New Orders Index are responsible for the DXY’s fall.
• The US ISM New Orders Index reflects the forward demand by the households.

Gold price (XAU/USD) is auctioning above the crucial support of $1,740.00. The precious metal has attracted bids as the US dollar index (DXY) has surrendered more than half of Wednesday’s gains. The DXY has tumbled on lower expectations for the US Nonfarm Payrolls (NFP) and the downbeat US ISM New Orders Index data released on Wednesday.

As per the market consensus, the US economy added 270k jobs in June, higher than the former release of 390k. However, the Unemployment Rate may remain stable at 3.6%. It is worth noting that lower additions to the labor market do not resemble a slowdown in the job market. The US employment level is optimal and has less room for more jobs. However, this might trim the confidence of the Federal Reserve (Fed) in announcing extreme restrictive policy measures.

The US ISM New Orders Index landed at 55.6, significantly lower than the estimates and the prior print of 62.1 and 57.6 respectively. The corresponding data reflects the forward demand by the households and eventually, the lower New Orders Index indicates lower demand ahead.

Gold technical analysis

At the lower timeframe, the gold prices are forming an Inverted Flag that signals a continuation of a bearish momentum after a rangebound phase.  The downward sloping trendline plotted from $1,812.15 is acting as a barricade for the counter.  The declining 200-period Simple Moving Average (SMA) at $1,787.75 adds to the downside filters.  It is worth noting that the momentum oscillator, Relative Strength Index (RSI) (14) is displaying overbought signals. Also, the Moving Average Convergence Divergence (MACD) (12,29,9) is portraying exhaustion in the pullback move.

Gold intraday chart