Strong US Data Driving Dollar

The US Dollar is pushing higher again this week which is weighing heavily on gold prices currently.

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Despite the market no longer pricing in any further Fed rate hikes this year, the drive seems to be linked to the resilience of the US economy, as shown through recent data strength. With the US economy holding up far better than that of the eurozone, USD continues to attract capital, despite shifting Fed expectations. Indeed, with traders now far less hawkish on the ECB, the divergence in outlook between the Fed and the ECB has narrowed considerably, also helping drive capital back into USD. This dynamic is making it difficult for gold to gain ground here and, while USD continues higher, the metal looks poised for further losses.

US Data on Deck

Looking ahead today, the focus will be on the latest US ISM manufacturing reading and JOLTS jobs number. With the prior manufacturing PMI having bucked the trend of weaker performance in the eurozone and the UK, traders will now be looking for the ISM reading to hold up similarly. The market is looking for the index to print 46.9 from 46 prior which, while still negative, should keep the current narrative in place, likely weighing on gold prices near-term.

Technical Views

Gold                        

The failure at the 1973.51 level is potentially carving out the right shoulder of a sloping head and shoulders pattern. Capped by the bear channel top also, this resistance area is a key pivot for the market and, while below here, the focus is on a further push lower. The rising trend line (neckline) will be the first support area to watch ahead of 1905.46 and 1871.04 below. 

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