Charts indicate that Gold is declining, but not outright, as it is currently just below $1,800.
Charts indicate that Gold is declining, but not outright, as it is currently just below $1,800.

SonyNet - The gold rally has it already peaked? Not nearly, yet $20 declines or more in a day can be highly unsettling to longs in the game, according to chart signals.

The December contract for the benchmark gold futures on the New York Comex closed at $1,798.10, down $17.40 or roughly 1%. Last week, December gold gained almost 1.5%, continuing a rally that has gained bulls who have been building up positions in the yellow metal about 5% so far.

By 15:22 ET (19:22 GMT), the spot price of bullion, which some traders follow more closely than futures, was at $1,779.36, down $24.28 or 1.4% from the previous day.

According to Sunil Kumar Dixit, a technical gold chartist who monitors the market price, "the short term uptrend is intact as long as gold, on a daily basis, closes above $1780." Gold could experience more falls in the $1,760–$1,750 region if it closes below that level.

Up to the release of the Federal Reserve's July meeting minutes on Wednesday, gold may stay trapped at just about $1,800.

After a massive U.S. jobs report for July allayed concerns about the possibility of a recession, the Fed minutes have gained in significance. The most significant monthly reduction in consumer price hikes since 1973 was shown by last week's inflation figures.

Fed fund futures indicate a larger likelihood that policymakers would raise rates by 50 basis points when they meet in late September rather than by 75 basis points as they have at their past two meetings, indicating that traders are now pricing in a less hawkish Fed.

Despite the shift in sentiment away from hawkishness, the dollar soared to a one-week high on Monday, adding to the pressure on gold.

In reference to the relationship between the dollar and gold, Craig Erlam, analyst at online trading platform OANDA, said: "This could just be a technical move, with the dollar receiving some support after pulling more than 4% off its highs." "Gold has also experienced a robust bounce, and $1,800 is appearing to be a significant hurdle."

Along with the Fed minutes, July retail sales data will be released on Wednesday. These numbers will be scrutinised for clues about the strength of consumer spending following a downturn in second quarter growth.

Following a growth of 1.0% the previous month, economists are forecasting a rise in retail sales of just 0.1%, with declining fuel prices contributing to some of the decline.

With home start data for July, which fell to a nine-month low in June, due on Tuesday, investors will also receive an update on the cooling U.S. housing market.