Due to the increased instances of the Delta variant of COVID-19, gold is modestly higher. Gold prices have risen from their low of $1789 on Friday to trade above $1808, boosted by a drop in US bond yields; but, the dollar index's strength is restraining gains.
The dollar was supported on Friday by rising US bond yields and signs of growing US manufacturing activity. However, the dollar index is currently trading near 92.69, which is slightly lower than the previous week's high of 93.19.
Global economic data was mixed for gold prices. The July Markit manufacturing PMI in the United States unexpectedly increased by +1.0 to 63.1, beating estimates of -0.1 to 62.0. The July Markit services PMI, on the other hand, plummeted -4.8 to 59.8, missing forecasts of 64.5.
The Eurozone July Markit composite PMI increased by 1.1 points to 60.6, above estimates of +0.5 points to 60.0 and marking the fastest rate of expansion in 21 years. In addition, the ECB's Survey of Professional Forecasters boosted its Eurozone GDP prediction for 2021 to 4.7 percent.
Gold prices benefit from the ECB's dovish statements. Villeroy, a member of the ECB's Governing Council, said the ECB's new interest rate guidance means it won't contemplate hiking rates until its predictions show inflation hitting the 2% objective in the next 12 to 18 months.
According to the CFTC Commitments of Traders report for the week ending July 20, the net long position in crude oil futures climbed by 5136 contracts to 195972 contracts. The speculative long position climbed by 1769 contracts, while the speculative short position decreased by 3367 contracts.
The Fed meeting this week is expected to give gold prices a new direction. From July 27-28, the FOMC will meet for two days. While the committee's meeting is unlikely to result in any policy changes, it will be vital to keep an eye out for signals as to when the US central bank might begin to tighten its loose monetary policies.
Gold prices are expected to remain solid while trading above a major support level of $1785-$1765, while modest resistance might be found near $1822-$1842.