Gold Price Forecast: XAU/USD bulls attack $1,780 hurdle, Fedspeak, US NFP in focus

• Gold price grinds higher of late, refreshes monthly top during the five-day uptrend.
• Softer US dollar, fears of recession favor buyers ahead of key data/events.
• Likely escalating US-China tussles also underpin XAU/USD upside.

Gold price (XAU/USD) picks up bids to renew a one-month high near $1,778 during Tuesday’s Asian session. In doing so, the yellow metal rises for the fifth consecutive day amid broad US dollar weakness and the market’s rush towards risk safety amid the fears concerning economic slowdown.

US Dollar Index (DXY) refreshed its monthly low on Monday, down 0.13% intraday near 105.24 at the latest, as fears of “technical recession” in the US escalated amid downbeat data. US ISM Manufacturing PMI dropped to the lowest since 2020 in July as the activity gauge dropped to 52.8 versus 53.0 prior. However, the actual figures were better than the 52.0 market forecast. Also, final readings of the US S&P Manufacturing PMI eased below 52.3 initial estimates to 52.2, compared to 52.7 prior.

It should be noted, however, that the disappointing statistics from Eurozone and the risk-negative catalysts surrounding China appeared to have probed the US dollar bears, which in turn have stopped XAU/USD bulls, during late Monday.

That said, Germany’s Retail Sales dropped 8.8% YoY in June versus -8.0% market consensus and -3.6% prior. On the other hand, Reuters quotes three sources familiar with the matter to mention that US House of Representatives Speaker Nancy Pelosi was set to visit Taiwan on Tuesday as the United States said it wouldn't be intimidated by Chinese threats to never "sit idly by" if she made the trip to the self-ruled island claimed by Beijing. Furthermore, the news suggests that the US is considering limiting shipments of American chipmaking equipment to memory chip makers in China.

Against this backdrop, Wall Street closed with mild losses while the US 10-year Treasury yields refreshed a four-month low of around 2.58%. Also, the S&P 500 Futures drops 0.25% on a day to 4,110 by the press time.

To sum up, the softer US dollar and the market’s rush towards risk-safety could favor gold buyers. However, speeches from Chicago Fed President Charles L. Evans and President of the Federal Reserve Bank of St. Louis James Bullard will be important for directions ahead of Friday’s US Nonfarm Payrolls (NFP).

Technical analysis

Gold price picks up bids inside an eight-day-old bullish channel, recently nearing the resistance line, amid overbought RSI (14). That said, a convergence of the stated channel’s upper line and the 50% Fibonacci retracement (Fibo.) of June-July downside, near $1,780, appears a tough nut to crack for the XAU/USD bulls considering the RSI conditions.

Even if the yellow metal manages to cross the $1,780 hurdle the 61.8% Fibonacci retracement level and July’s peak, respectively near $1,804 and $1,815, could challenge the gold buyers.

Meanwhile, pullback moves could retest the 200-SMA level surrounding $1,767 before declining towards the one-month-old horizontal support line near $1,753-52.

Also acting as strong support is the convergence of the 50-SMA and lower line of the aforementioned bullish channel, near $1,736.

Gold: Four-hour chart

Trend: Pullback expected