The price of gold is off to a strong start for the new week and is moving away from a low reached the previous week over a year old. On the other hand, the intraday increase did not demonstrate sufficient bullish confidence, and it stalled out just in front of the $1,725 mark. During the early part of the North American session, the last time the XAUUSD was seen trading was in the neighborhood of $1,715 to $1,716. This represents an increase of more than 0.50 percent for the day.

The United States Dollar’s fall has been supportive of gold prices.

The United States dollar continues its retracement decline from a two-decade high and experiences significant selling for the second day in a row as the probability of a rate raise move by the Federal Reserve by 100 basis points in July decreases. This, in turn, is considered to be an essential component that provides some support to the gold priced in dollars.

The previous week, several officials from the Federal Reserve made it clear that they did not support the more significant increase in interest rates that the markets had priced in. It is essential to remember that investors increased their wagers on a supersized Fed rate rise after US consumer inflation in June soared to the highest level since November 1981. This is something that should not be forgotten.

Members of the FOMC who were less hawkish than average impact on the USD.

Fed Governor Christopher Waller and St. Louis Fed President Jim Bullard, two of the most hawkish members of the Federal Open Market Committee (FOMC), have pushed back against expectations for more aggressive rate rises by the United States Central Bank. In addition, on Friday, the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, warned that moving too rapidly may damage favorable parts of the economy and add to the uncertainties.

This, in turn, continued to put pressure on the American dollar. A combination of variables prevents optimistic traders from taking aggressive bets and putting a cap on any substantial upside for the price of gold, at least for the time being. This is maintaining a lid on any meaningful upside for the gold price.

The risk-taking drive creates a headwind for the price of gold.

A surge against the trend is taking place throughout the world’s equities markets on the back of expectations that the Federal Reserve would be less aggressive than was first expected at its forthcoming meeting. The temptation to take on more risk has resulted in a new leg up in the rates on US Treasury bonds, which is, in turn, acting as a headwind for the safe-haven commodity gold.

The yield on the benchmark 10-year US government bond has recently climbed back beyond the barrier of 3%. This further adds to the gains that have been capped for the XAUUSD and are helping to prevent further losses for the USD. As a result, it will be wise to wait until there is significant follow-through purchasing before determining whether or not spot prices have reached their lowest point.

The technical prognosis for the gold price

The price of gold has consistently shown some tenacity when trading below the round-figure threshold of $1,700. The failure of the metal to get any severe momentum shows that the risks in the near term continue to be weighted toward the negative. This, in turn, signals that any following strength above the $1,725-$1,726 immediate barrier might potentially encounter strong opposition close to the $1,734-$1,735 horizontal zone. A sustained rise above might set off a wave of short-covering, raising the XAUUSD into the supply zone between $1,749 and $1,752 in price.

On the other hand, the swing low reached the previous week in the $1,698, and $1,697 seems to now defend the immediate downside. A decisive break below would render the XAUUSD vulnerable and accelerate the decline towards September 2021’s bottom, which is expected to be in the vicinity of $1,787 to $1,786. The price of gold may continue on its current downward trend and approach the annual low for 2021, which is projected to be somewhere in the region of $1,677 to $1,676.