As US economic data is reviewed, XAU/USD slips off $1,740 support-turned-resistance

During Tuesday's Asian session, the gold price (XAU/USD) retests its intraday low near $1,736 after a failed rebound off the one-month low. In doing so, metal prices take cues from the most recent comeback of the U.S. dollar from its intraday low and justify the challenges to market mood originating from China and the central bankers' front.

The US Dollar Index (DXY) rebounded from the daily low to 108.81 after reversing from a new 19-year high the day before. In doing so, the dollar's index against the six main currencies appears to validate the market's fears of higher interest rates despite the imminent economic downturn, as Fed Chair Jerome Powell had previously suggested.

It is important to note that rumors of an escalation in Sino-American tensions over Taiwan also impose downward pressure on the XAU/USD exchange rate, primarily since Beijing is one of the world's largest commodities consumers. The news further strengthens the dollar's appeal as a safe haven. Politico has reported that the Biden administration will ask Congress to authorize a $1.1 billion arms sale to Taiwan. Prior to it, the movement of US boats in the Taiwan Strait and the visits of American diplomats to Taipei provoked China.

In contrast, the most recent news from Bloomberg regarding the Eurozone's ability to combat the energy issue appears to challenge the XAU/USD bearish. "The European Union is on track to fulfill its gas storage filling goal two months ahead of schedule as the EU prepares for a harsh winter with Russia limiting supplies and surging energy prices ravaging the continent," Bloomberg reported.

Monday saw the consolidation of recent market movements amid a light economic calendar and contradictory Fed commentary. In spite of this, the Dallas Fed Manufacturing Business Index increased to -12.9 from -20.2, as anticipated, and -22.6 previously. Neel Kashkari, president of the Minneapolis Federal Reserve Bank, claimed that people now comprehend how serious we are about bringing inflation back to 2%.

Following a two-day uptrend to reestablish the monthly high, the 10-year US Treasury yields fall to 3.10% amidst these plays. With this, intraday gains for S&P 500 Futures are reduced.

Moving forward, the August US Consumer Confidence and statements from Fed speakers are highlighted as the primary drivers to watch for additional impetus. In his Jackson Hole speech, Fed Chair Powell voiced concern over economic slowdown and labor market pressures. Consequently, Friday's US employment report will garner a great deal of attention.