• Gold price remains on the back foot around one-month low.
• Hawkish Fed bets, fears surrounding economic slowdown propel DXY towards the highest levels since September 2002.
• Light calendar, UK holiday could test bears on their way to refresh yearly low.
• US job numbers could weigh on XAU/USD as Powell warns Americans at the Jackson Hole Symposium.

Gold price (XAU/USD) extends Friday’s losses to renew its monthly bottom around $1,721, at $1,723.50 by the press time, as risk-aversion joins hawkish Fed bets to underpin the US dollar’s rally towards the multi-year high.

While portraying the mood, the US two-year Treasury yields rose to the highest since 2007, up 1.9% intraday near 3.468% at the latest, whereas the 10-year benchmark adds nearly 10 basis points (bps) to 3.129%. Furthermore, the S&P 500 Futures drop 0.80% intraday while tracing Friday’s downbeat Wall Street performance and highlighting the sour sentiment.

Also, market pricing now indicates a 74.5% chance the Fed will hike rates by 75 bps at its September meeting, per BOE’s FED WATCH tool. It’s worth noting that the US Dollar Index (DXY) also cheers the hawkish Fed bets and firmer yields to rise to the fresh high since September 2002, up 0.50% near 109.45 at the latest.

It should be noted that Fed Chair Jerome Powell’s resistance to step back from the aggressive rate hikes propelled the hawkish bets on the Fed rate hikes.

On the other hand, the US-China tussles over Taiwan, amid the latest chatters of vessels moving in Taiwan Strait, join Beijing’s suspension of meat imports from an American firm to raise economic fears and challenge the market sentiment, which in turn weigh on XAU/USD.

Looking forward, a light calendar and extended weekend in the UK may restrict gold price moves on Monday, likely to keep bearish. However, Fed Chair Powell’s warning that Americans were headed for a painful period of slow economic growth and possibly rising joblessness, per Reuters, emphasizes Friday’s US jobs report for clear directions.

Technical analysis

A clear downside break of a five-week-old ascending trend line, around $1,740 by the press time, directs XAU/USD bears towards the $1,700 threshold. It’s worth noting, however, that multiple lows marked during late July around $1,712 will precede the 78.6% Fibonacci retracement of the metal’s July-August upside, near $1,708, to offer intermediate halts during the anticipated fall.

It’s worth noting that the oversold RSI may challenge the gold price sellers around the $1,700 threshold, if not, then the south-run towards the yearly low near $1,680 appears more likely.

Meanwhile, corrective pullback needs validation from the 61.8% Fibonacci retracement level of $1,730 before aiming to retest the support-turned-resistance line, around $1,740.

In a case where XAU/USD remains firmer past $1,740, a one-week-old descending resistance line and the 100-SMA on the four-hour chart, respectively around $1,763 and $1,768, could appear as the last defense of bears.

Gold: Four-hour chart

Trend: Limited downside expected