Gold continues to remain under pressure and trades below the key $1900 psychological level, hitting a five-month low at $1889.59 on Thursday.
China’s murky prospects of economic recovery along with the recent robust US economic performance are putting significant pressure on XAUUSD bulls. 10-year US Treasury yields have reached a 10-month high, strengthening the dollar and making some investors reconsider their current gold positions.
Any macro indication in support of a rate hike at the next Fed meetings will add additional pressure on XAUUSD, with the potential to drive it lower towards the $1800 psychological level.
From a technical perspective we might expect XAUUSD to consolidate around the $1900 big figure as investors await signals which could potentially affect the Fed’s future interest rate decision.
At the time of writing, the CME FedWatch Tool indicates an 86.5% chance of interest rates remaining unchanged at 5.25% - 5.5%. during the next Fed decision in September.
The $1900 level is set to be initial resistance, while the 21-day SMA moving under the 50-day SMA indicates the potential for a further decline.