The yellow metal fought to get a clear trend on Tuesday even as market opinion was slightly positive and the US Dollar Index failed to entice bulls despite upbeat Factory Orders for July.
The cause can be linked to the new geopolitical tension concerning Iran and China, as well as the spike in the US covid-19 cases versus reducing infections at other developed nations. Moreover, hopes over US President Joe Biden-backed stimulus pass and the IMF’s record allocation to the Special Drawing Rights (SDRs) to battle the pandemic.
The XAUUSD pair failed to make a decisive move in either direction on Monday and closed the day virtually unchanged at $1,814. On Tuesday, the XAU/USD pair continues to move up and down in a narrow range as investors wait for the next significant catalyst.
Stating on the US Dollar’s market estimate and its impact on gold prices, “we think the ongoing view that inflation spikes are mostly transitory and that the FOMC is not actively considering policy adjustments at the moment is mildly bullish gold at best and neutral at worst,” said HSBC analysts. “In our view, no policy change, only a modest shift in the statement’s language and no new taper insights have understandably fostered little USD change, for now.”
On Wednesday, the ADP Employment Change data and the ISM’s Services PMI will be watched by investors for a new possible trend momentum. However, the market effect to these data could bull ahead of Friday’s highly awaited US Nonfarm Payrolls report.
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