XAU/USD is trading near 1740.00, updating local lows from July 28.
The pressure on the position of the instrument is exerted by distinct "hawkish" signals generated by the US Federal Reserve in an attempt to overcome record inflation. This week, investors are looking forward to the regulator's conference in Jackson Hole, where the head of the Fed, Jerome Powell, will make a traditional speech. Market participants are looking to get a few more hints on the prospects for further monetary policy, as current analyst forecasts suggest a roughly equal chance of an interest rate hike during the September meeting of the regulator by 50 basis points or by 75 basis points.
In addition, the XAU/USD pair cannot change the current trend against the backdrop of a rising dollar, which is supported, among other factors, by the fall in the Chinese yuan quotes. While the US Federal Reserve is hesitant about the pace of tightening monetary parameters, the People's Bank of China is pursuing an easy monetary policy and adjusting interest rates downwards in order to support the national economy after the coronavirus pandemic. The country still adheres to a "zero tolerance" policy for the possibility of an increase in the incidence of COVID-19 in the population, which leads to new quarantine restrictions in the provinces.
After a significant increase in demand for gold contracts at the beginning of the month, investor activity has now somewhat slowed down and, according to the latest report from the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions corrected from 142.9 thousand to 141.2 thousand. Insignificant changes have also occurred in the balance of sellers and buyers: the "bulls" hold the lead in contracts secured by money, but this week they reduced their activity by 3.692 thousand contracts, while the "bears" increased their number by 2.871 thousand.
Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down, keeping a fairly stable sell signal (located below the signal line). Stochastic, having reached its lows, reversed into the horizontal plane, indicating risks of oversold instrument in the ultra-short term.
Resistance levels: 1752.87, 1775.00, 1784.31, 1800.00. | Support levels: 1730.00, 1720.00, 1700.00, 1687.15.