Gold Hits Roadblock on Its Journey to the $1,800/oz Target

Gold Hits Roadblock on Its Journey to the $1,800/oz Target

Gold (XAU/USD) was seen trading around the $1,775 level after nearing its multi-year high that was set last Wednesday.

A combination of favorable conditions failed to help the commodity add to the gains recorded in previous trading sessions, instead, it was set into a range-bound mode on Tuesday. Increasing concerns about the ever-rising Coronavirus cases globally lent some support to the yellow metal in the early Asian session.

Investors remain worried that the second wave of Covid-19 infections could invoke renewed lockdown restrictions and that the recent economic recovery may be short-lived. These concerns triggered a slight pullback in the global equity markets and caused investors to seek refuge in traditional safe-haven assets.

Meanwhile, gold failed to muster any significant gain yesterday in light of the numerous supporting factors largely because the US dollar picked up demand as well, which tends to weaken the dollar-denominated commodity. The USD demand was ignited by a hawkish US ISM Non-Manufacturing PMI report, which showed that the economy has picked up in recovery.

Moving on, market participants will be looking to see if gold can attract dip-buyers from this level or if it will continue in its consolidative state. The gold market is expected to make a comeback today considering the absence of any major US economic release and the grim outlook of the Coronavirus pandemic.

XAUUSD – Daily Chart

Gold (XAU) Value Forecast — July 7

XAU/USD Major Bias: Sideways

Supply Levels: $1,779, $1,790, and $1,800

Demand Levels: $1,765, $1,758, and $1,745

Gold was met with strong resistance at the $1,786 region as it attempted to capitalize on the $1,780 break yesterday. At press time, the yellow metal has reversed to the $1,775 region again as we wait for signs of the next possible surge. We could see a decline to the $1,770-65 region (the baseline of our ascending trendline) where it could likely pick up a strong bullish bounce to approach the $1,800 target again.

On the flip side, a sustained decline below the $1,745 could quickly switch the overall bias to bearish.

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