The Gold Spot Price (XAUUSD) closed its third consecutive week in the red and is down 54 basis points week-to-date. The safe haven yellow metal has been losing out to the Greenback’s strength, bolstered by its safe haven properties amidst debt ceiling negotiations, along with growing expectations of a rate hike being priced in.  

The market now anticipates a 63% chance of a Fed rate hike, up almost threefold from the probability priced in a month ago. The XAUUSD will likely see volatility pick up steam as the U.S. releases critical economic data this week.  

Technical 

The Gold spot price uptrend is threatened, given that price action is moving below the ascending channel pattern to test the 100-day moving average. Support and resistance were established at the 1903.39 and 2077.80 levels, respectively.  

After rejecting its resistance, traders sold off, taking the spot price towards the 50% Fibonacci Retracement level. Given the confluence represented by the 50% retracement meeting the 100-day moving average, ascending channel support, and oversold RSI, a reversal could play out if traders respect the levels as a dynamic support. Bullish traders will likely aim for the 2077.80 level.  

In contrast, a high volume breakdown below the ascending channel pattern and 50% Fibonacci Retracement level could indicate that bearish traders still control the spot price direction. The next point of interest will likely be the Fibonacci Retracement Golden Ratio at the 1910.98 level.  

Summary 

U.S. Manufacturing data and Labour Market Reports will be the key drivers of sentiment for the Gold Spot price this week. If the U.S. economy points towards strength or resilience, further rate hikes could materialise to put more downward pressure on the Gold Spot Price in favour of the Greenback. The 1943.14 level at the 50% Fibonacci Retracement will be key to monitor. 

Sources: CME, Reuters, TradingView