Article by: ETO Markets

Gold prices fell during the North American session on mixed U.S. economic data, falling below the psychologically key $2,500 level. Despite the successive contraction of the US ISM manufacturing PMI, the improvement in the employment sub-index eased market concerns about the labor market, thus strengthening the US dollar and leading to pressure on gold. Meanwhile, despite the US 10-year Treasury yield falling to 3.84 per cent, gold failed to rally effectively. The market expects the Fed to cut interest rates by 25 basis points at its September meeting, which will put pressure on the dollar and support non-yielding gold. However, there is still uncertainty about future market dynamics as investors expect a bigger rate cut. Next, US economic data, including JOLTS job openings, ADP national employment change, and non-farm payrolls (NFP) data, will further influence market sentiment and gold price action.

From a technical point of view, Despite the drop below $…, the overall trend remains upward. The relative Strength Index (RSI) indicates that the buy side remains dominant, but there is a risk of further weakness in the near term. If the XAU/USD breaks below $…, near-term support will be $…, while the next key support is in the August 15 low of $… to $… area. If gold can hold above $…, subsequent resistance will be at the all-time high between $… and $…, and a break above these levels could pave the way for further gains.