Gold Hovers Around $1800 Ahead Of US ISM PMI Data

Gold trades at $1820 per ounce, but the price is likely to retreat below $1,800.00 as a reaction to traders and markets’ bet on a 75 bps rate hike by the Fed in July’s FOMC meeting.

The Gold Index is establishing below $1,810.00 after facing a steep fall while attempting a bullish reversal on Thursday. The precious metal is hovering near a fresh two-week low at $1,802.78 and is aiming to balance below the psychological support of $1,800.00.

Fed’s focus continues to be on bringing price stability to the economy and to cool the hot inflation levels. The activation of the descending triangle could send the gold prices deep into the negative trajectory.

The release of the US core Personal Consumption Expenditures (PCE) Price Index at 4.7% has boosted expectations of one more 75 basis points rate hike in July.

The US core PCE Price Index remained in line with the estimates but lower than the prior release of 4.9%. This indicates that the elevation of interest rates by the Fed to 1.50-1.75% in its past three monetary policy meetings has failed to make a substantial change in the price levels.

Going forward, the focus will remain on the US ISM PMI. A preliminary estimate for the economic data is 55, lower than the prior release of 56.1.

Technically; on an hourly scale, the gold prices are expected to slip significantly below the psychological support of $1,800.00, which will activate the Descending Triangle formation. The downward sloping trendline of the chart pattern is placed from June 16 high at $1,857.58 while the horizontal support is plotted from June 14 low at $1,805.11.

The gold bears have defended the 100-period Exponential Moving Average (EMA) at $1,820.11. Meanwhile, the Relative Strength Index (RSI) (14) will bring a fresh downside move after slipping below the 40.00.