Gold Price Forecast: XAU/USD approaches record highs

XAU/USD Current price: $2,927.93

• Peace talks around the Ukraine-Russia war underpinned the mood on Tuesday.
• Canadian annual inflation held below 2%, further boosting the sentiment.
• XAU/USD resumed its advance and aims to retest its record high in the $2,942 price zone.

Gold price is up on Tuesday, with XAU/USD approaching the $2,930 mark in the American session. The bright metal resumed its advance after falling to $2,876.93 on Friday, up for a second consecutive day and closing into the record high at $2,942.76 posted this month.

The US Dollar (USD) fell away from investors' radar amid an improved mood, based on hopes that the Russia-Ukraine war would soon end. Russian and United States (US) delegations met in Riyadh to hold peace talks, although without the presence of Ukrainian leaders.

“No decisions about Ukraine without Ukraine … Europe must have a seat at the table when decisions about Europe are being made,” Ukraine’s President Volodymyr Zelensky said at the Munich Security Conference over the weekend. Nevertheless, diplomats from the US and Russia have hailed the meeting in Saudi Arabia as positive.

 Meanwhile, Canada reported that the January Consumer Price Index (CPI) rose by 1.9% over the last twelve months, up from the December reading of 1.8%, and it matched analysts’ expectations. On a monthly basis, prices rose 0.1%, higher than the -0.4% posted in December. The optimistic figures further backed the market mood.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for XAU/USD shows buyers regained control. Technical indicators resumed their advances after correcting extreme overbought conditions, while the pair develops above all bullish moving averages. Additionally, the 20 Simple Moving Average (SMA) maintains its firmly bullish slope far above the 100 and 200 SMA, which also head north.

In the near term, and according to the 4-hour chart, XAU/USD has room to extend its advance. The pair recovered above a flat 20 SMA, now providing support at around $2,909.60. The 100 and 200 SMAs, in the meantime, accelerated north far below the shorter one, reflecting buyers' dominance. Finally, technical indicators regained their upward strength, although the Momentum indicator remains below its 100 line.

Support levels: 2,909.60 2,897.10 2,876,90

Resistance levels: 2,942.75 2,960.00 2,975.00