XAU/USD rebounds from intraday lows, risks another move south

XAU/USD Current Price: $2,487.45

• Weak macroeconomic data in the United States and upcoming employment figures fueled caution.
• Market players are hoping for new clues about what the Federal Reserve will do this month.
• XAU/USD is poised to extend its near-term decline, with sellers now around $2,500.

A risk-adverse environment coupled with weaker-than-expected macroeconomic data from the United States (US) sent speculative interest into the US dollar on Tuesday. XAU/USD crashed towards the $2,470 price area and remains under pressure in the mid-afternoon US.

S&P Global released its final US manufacturing PMI estimate, revising the August figure down to 47.9 from 48.0 previously. In addition, the official ISM Manufacturing PMI for the same month was printed at 47.2, improving from the 46.8 shown in July, although missing expectations of 47.5. The Employment Sub-Index rebounded to 46 from 43.4 in July, while the New Orders Index fell to 44.6 from 47.4 over the same period. Finally, the Price Paid Index, the inflation component, rose to 54 from 52.9.

Lackluster US data kept investors on the defensive ahead of employment data. The country will release the non-farm payrolls (NFP) report on Friday, and speculative interest hopes the data could provide a clearer picture of what the Federal Reserve (Fed) will do when it meets in a few weeks. The central bank is expected to cut interest rates, with doubts over whether the cut will be by 25 or 50 basis points (bps).

XAU/USD Short Term Technical Outlook

The daily chart for XAU/USD shows that the pair is down for the third day in a row, with increased bearish potential, although technical confirmation is lacking. Gold has rebounded from intraday lows and is currently struggling to hold ground above a 20 simple moving average (SMA) at around $2,485. At the same time, the 100 SMA has partially lost its bullish power well below the current level, but still indicates some upside exhaustion. Finally, technical indicators offer neutral to bearish slopes, sitting just above the median lines.

In the short term, according to the 4-hour chart, the risk is to the downside. XAU/USD is developing below the 20 and 100 SMA, with the shorter gaining downward traction. Technical indicators, meanwhile, hit new multi-week lows within negative levels, consistent with bearish dominance. Failure to recover the $2,500 mark in the coming sessions will likely lead to a lower low for the week.

Support levels: 2,475.70 2,463.40 2,451.35

Resistance levels: 2,389.60 2,507.40 2,519.75