XAU/USD sellers keep reins below $1,800, US Durable Goods Orders eyed

• Gold drops for second consecutive day as firmer USD adds to the bearish impulse.
• Market sentiment sours as virus woes escalate, mixed data raise concern over Fed’s tapering ahead of Jackson Hole Symposium.
• DXY snaps three-day downtrend ahead of the data, risk catalysts are important too.

Gold (XAU/USD) holds the lower ground near $1,795, down 0.45% intraday, during a two-day downtrend ahead of Wednesday’s European session.

Although risk-on mood favored gold earlier during the previous day, mixed US data and cautious sentiment ahead of the week’s key releases dragged the metal from a three-week top the previous day. That said, the US Dollar Index (DXY) strength exerts an additional downside pressure on the metal to mark a second consecutive daily loss.

Softer US Richmond Fed Manufacturing Index data for August, 9 versus 25 expected, joins the first rise in the New Home Sales in four months to push back the Fed’s tapering concerns as policymakers brace for Jackson Hole Symposium. The mixed data currently looks at the US Durable Goods Orders for July, forecast -0.3% versus +0.9% prior, for further firming up odds favoring the need for easy money policies.

Also positive for the risk appetite was the US House of Representatives passed a $3.5 trillion budget and is progressing on the $1.2 trillion infrastructure plan, which in turn boosts the stimulus hopes.

However, multi-day top of the US covid infections and a record high of daily virus cases in Australia, not to forget fading vaccine optimism, weigh on the market sentiment and heavy the gold prices. Furthermore, cautious mood ahead of the annual speech of Fed Chair Jerome Powell at the Jackson Hole Symposium, on August 27, adds to the sluggish mood and favors the commodity sellers.

Amid these plays, the US 10-year Treasury yields stay firmer around 1.30% after rising the most in two weeks the previous day, underpinning the USD strength. Also favoring the greenback buyers, weighing on the gold’s quote, is mildly offered US stock futures.

Given the recently release mixed data from the US, gold bears look to the US Durable Goods Orders for July, forecast -0.3% versus +0.9% prior, for further firming up controls. However, the US preliminary Q2 GDP and Fed Chair Jerome Powell’s speech the Jackson Hole becomes the key event of the week.

Read: Durable Goods Orders Preview: The trigger for a greenback comeback?

Technical analysis

Gold extends pullback from a three-week-old horizontal resistance to attack 200-SMA, around $1,795 by the press time.

Given the firmer Momentum and bearish MACD signals, the latest pullback is likely to extend towards an ascending support line from August 10, near $1,790.

However, any further weakness past $1,790 will confirm a rising wedge bearish formation, suggesting a theoretical slump towards $1,700.

Meanwhile, recovery moves need to cross the $1,807 immediate hurdle to recall gold buyers.

Following that, the upper line of the stated bullish chart pattern and six-week-old horizontal resistance, respectively around $1,824 and $1,835, will be in focus.

Gold: Four-hour chart

Trend: Further weakness expected