Forecast for Gold Price: XAU/USD corrects from $1,780, although upward stays favored on lower DXY

Gold price (XAU/USD) has retraced to about $1,774.65 after reaching a high of $1,780.58 during the Tokyo morning session. As an upward break of consolidation is followed by a low-volume test of the breakout, there is a good chance that the precious metal will bounce once again. Earlier, the precious metal demonstrated a breakout to the upside from the consolidation created between $1,764.45 and $1,773.35.

In the meanwhile, the US dollar index (DXY) has experienced a minor bounce after opening at a three-week low of 105.05 points. The DXY has taken on a bearish trend as merchants and manufacturers have drastically reduced their forward demand. Monday saw the release of weak US Institute of Supply Management (ISM) Manufacturing New Orders Index data.

The economic data predicts merchants' and manufacturers' future demand. At 48, the numbers stayed below the forecasts of 52 and the previous reading of 49.2 A significant reduction in the demand prediction index precipitated a sharp decline in the DXY.

Friday's release of the US Nonfarm Payrolls (NFP) report will continue to dominate the attention of markets moving ahead. According to market consensus, the US economy created 250k jobs in July, a decrease from the 372k jobs created in June. This will increase the price of gold relative to the U.S. dollar.

The construction of a rising channel by gold prices on an hourly basis suggests the continuance of an upward trend. The top section of the previously described chart pattern is based on the high of July 22 at $1,739.37, while the bottom portion is based on the low of July 21 at $1,681.87.

The rising 50-day and 200-day exponential moving averages (EMAs) at $1,765.40 and $1,742.85, respectively, add to the upward filters. In the meantime, the Relative Strength Index (RSI) (14) is striving to recapture levels of 60.00. A similar event will necessitate a new bullish impulse wave.