The gold price has dropped slightly in the last few hours and is now trading at $1,938. The US dollar has strengthened, which is likely to put pressure on gold prices.

Gold prices were volatile in the days leading up to this, with sharp moves in both directions. This was due to mixed US economic data released on Friday. The Non-Farm Employment Change, ISM Manufacturing PMI, ISM Manufacturing Prices, Construction Spending, and Final Manufacturing PMI all came in better than expected. However, the Unemployment Rate and Average Hourly Earnings disappointed.

Despite the mixed data, the US dollar index edged higher, which weighed on gold prices. The Swiss GDP also reported a 0.0% growth, below the 0.1% growth that was expected. Additionally, ECB President Lagarde’s remarks earlier in the day had a negative impact on gold prices.

The Reserve Bank of Australia (RBA) is expected to keep the cash rate unchanged tomorrow at 4.10%. However, the RBA Rate Statement is still likely to be a market mover. The Bank of Canada (BOC) is also expected to keep monetary policy unchanged in its September meeting.

The key fundamentals for gold prices will be the ISM Services PMI and Australian GDP data, both due to be released on Wednesday.

Gold price technical analysis: Bears dominating below $1940

Gold price hourly chart

From a technical perspective, the XAU/USD failed to break above the 61.8% Fibonacci retracement level (1,948) and is now approaching the 50% retracement level (1,936). This level is providing support, and the yellow metal is currently trading between the 61.8% and 50% retracement levels.

A breakout from this range would provide a clearer direction for the market. A break below the 50% level could signal a new bullish momentum, while a break above the 61.8% level would confirm further growth.

The bias remains bullish as long as the XAU/USD stays above the 50% retracement level and the weekly pivot point of 1,935. However, only a valid breakout above the 61.8% level and a new higher high would activate further growth.

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