Yesterday, XAUUSD briefly edged the psychological $2,000 mark but then staged a pullback and now comfortably sits in the $1,975 region. Gold is propped by the USD weakness that was hit by another inconclusive round of talks in the US Congress and rather sad coronavirus headlines.
US Democrats and Republicans are still at odds about the new stimulus package. $600-a-week federal unemployment benefits already expired last week; and the longer the political uncertainty stays, the more harm may be inflicted on the national economy. People deprived of payments will obviously be reluctant to spend more which may endamage consumption. This spat in the Congress dampens the hopes of quick economic revival and puts pressure on the American dollar.
Another factor that determines the greenback’s march south is coronavirus statistics. While the overall number of new COVID-19 cases in the US reduced, the death toll again topped 1,000 people. Against this, the US Dollar keeps on falling and making gold a more attractive asset for the investors.
On Tuesday, markets remain calm amid an empty economic calendar. In the NY hours, the US will publish the ISM-NY Business Conditions Index for July and Factory orders for June that are both second-tier releases and are unlikely to influence much the XAUUSD dynamics. Traders are more focused on the US Nonfarm Payrolls that will be released on the last trading day of the week.
From the technical point of view, the non-yielding metal keeps on oscillating in a narrow range and will keep its rangebound theme unchanged at least for some time. If bulls strengthen their positions, XAUUSD may test the initial resistance at $1,985 and then aim further north at $2,000 and $2,100 levels. If bearish traders emerge, their targets will be $1,960, $1,940, and finally $1,907.