XAU/USD Current price: $2,888.80
- Tepid United States macroeconomic data undermined demand for the US Dollar.
- Geopolitical tensions and looming tariffs boosting the bright metal.
- XAU/USD extends its recovery, but another leg north not yet confirmed.
Spot Gold found an interim bottom at $2,832.56 on Friday, bouncing from the level ahead of the weekly close and extending its recovery on Monday. The XAU/USD pair trades around $2,885, up on broad US Dollar (USD) weakness. Financial markets kick-stated the week in optimistic mode, helped by macroeconomic data released throughout the first half of the day. The bright metal, in the meantime, found support on geopolitical woes.
On the one hand, Chinese NBS Purchasing Managers’ Indexes (PMIs) were better than anticipated in February, with index output up to 50.2 from 49.1 in January, while the non-manufacturing index rose to 50.4 from 50.2. Additionally, S&P Global released the final estimates of the February Manufacturing PMI for major economies, upwardly revising most of them.
On the other hand, tensions between the United States (US) and Ukraine persist after Ukrainian President Volodymyr Zelenskyy abruptly left a meeting with US President Donald Trump on Friday. As a result, Eastern European nations aligned beyond Ukraine on fears the US will retrieve its support.
The USD extended its slide after the US reported that the official ISM Manufacturing PMI fell to 50.3 in February from 50.9 in January, also missing expectations of 50.5. The bright metal, in the meantime, was underpinned by headlines indicating that US President Donald Trump is meeting with his aides to discuss canceling military aid to Ukraine.
Meanwhile, US tariffs of 25% on Mexico and Canada and an additional 10% on China are due to come into effect on Tuesday. Trump would decide on this matter later in the day. US Secretary of Commerce Howard Lutnick said Canada and Mexico have done a “good job” on the border, while adding they still need to tackle the fentanyl issue.
XAU/USD short-term technical outlook
From a technical point of view, the daily chart for the XAU/USD pair shows the ongoing recovery is not enough to anticipate a recovery towards record highs. The pair is trading well above bullish 100 and 200 Simple Moving Averages (SMAs), yet the 20 SMA provides dynamic resistance at around $2,899.50. Technical indicators, in the meantime, turned higher but hover around their midlines with uneven strength, overall remaining neutral.
In the near term, and according to the 4-hour chart, the risk skews to the upside, although additional confirmations are required. Technical indicators aim firmly higher, recovering from oversold readings yet currently battling their midlines. The same chart shows buyers appeared around a bullish 200 SMA, while a flat 100 SMA provides resistance at around $2,910.
Support levels: 2,876.90 2,858.70 2,845.40
Resistance levels: 2,894.80 2,907.60 2,925.60
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