Gold Price Forecast: XAU/USD extends slide to fresh weekly low near $1,770
- Gold fell sharply at the beginning of the week.
- Broad-based dollar strength weighs heavily on XAU/USD on Monday.
- Markets remain risk-averse amid China slowdown, escalating geopolitical tensions.
Gold started the new week under heavy bearish pressure and dropped to a fresh weekly low of $1,773. As of writing, XAU/USD was trading at $1,775, where it was down 1.5% on a daily basis.
Dollar recovery picks up steam
The disappointing macroeconomic data releases from China reminded investors that a slowdown in the world's second-biggest economy could significantly weigh on the demand outlook for the yellow metal.
Additionally, escalating geopolitical tensions with US lawmakers visiting Taiwan and China continuing its military exercises around the island forced investors to seek refuge at the start of the week. The dollar gathered strength amid risk aversion and the US Dollar Index (DXY) managed to build on Friday's recovery gains. As of writing, the DXY was up 0.6% on the day at 106.29.
Looking ahead, the Federal Reserve Bank of New York's Empire State Manufacturing Survey will be featured in the US economic docket. The NAHB Housing Market Index for August will also be looked upon for fresh impetus.
As of writing, US stock index futures were down between 0.3% and 0.5%. Unless these data allow risk flows to return to markets, gold could find it difficult to stage a rebound in the second half of the day.
Technical levels to watch for