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XAU/USD remains weak below $1,740 after Powell-led blow

Gold Price is licking its wounds while keeping its range below $1,740, as a fresh week kicks off on a defensive note. Markets reprice September rate hike expectations in the lead-up to the US Nonfarm Payrolls week, especially after Fed Chair Jerome Powell’s hawkish remarks at Friday’s Jackson Hole appearance.

Powell maintained that the Fed will continue with its tightening path until inflation is brought down substantially from a four-decade high. The Fed Chief also added that the September rate hike decision will be data-dependent.

The US dollar bulls the hawkish comments in their stride and staged an impressive comeback in American trading on Friday while Wall Street indices suffered heavy losses, as Powell doused speculation of policy easing in the months ahead to tackle economic slowdown.

The extension of risk-aversion combined with the dollar gains in Asia so far this Monday is keeping gold traders on the back foot, as they gear up for another critical week. The US will publish the critical ISM Manufacturing and Services PMIs ahead of Friday’s payrolls. Each incoming data will be closely examined for signals on the size of the next Fed rate hike.

China’s economic data will also hog the limelight, as it will have a significant impact on the market’s perception of risk sentiment, eventually affecting the dollar’s valuation.

Technically, gold price tumbled to challenge the critical rising trendline support, now at $1,735. Daily closing below the latter is needed to extend Friday’s sell-off towards the previous week’s low of $1,728.

Bears will revive the bets for a test of the $1,700 threshold in the upcoming sessions.

The 14-day Relative Strength Index (RSI) is holding flat but below the midline, backing the ongoing weakness in the yellow metal.

On the upside, any recovery attempts will need to beat Friday’s high of $1,759, around where the bearish 50-Daily Moving Average (DMA) lurks.

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