XAU/USD Current price: $2,731.61
- Stock markets lead the sentiment ahead of central banks’ announcements.
- The Chinese January Purchasing Managers’ Indexes came in worse than anticipated.
- XAU/USD is bearish in the near term, could approach the $2,700 mark before bouncing.
Spot Gold is under strong selling pressure at the beginning of the week, trading around the $2,730 mark in the American session. The bright metal was unable to advance against a battered US Dollar (USD) despite a dismal market mood.
News coming from China undermined the market sentiment. On the one hand, the country reported that business output declined in January. The NBS Manufacturing Purchasing Managers Index (PMI) printed at 49.1, below the 50.1 posted in December. The Non-Manufacturing PMI came in at 50.2, down from the previous 52.2.
Asian stock markets gained amid news related to AI developments while weighing on their overseas counterparts. DeepSeek, a Chinese AI company, gained traction and dragged alongside the tech sector. The same rally, however, fueled concerns about cheaper AI from China threatening US tech dominance. At the time being, Wall Street remains in the red, albeit most major indexes trimmed a good chunk of their early losses.
Speculative interest will now shift the focus to the upcoming central banks’ decision. The Federal Reserve (Fed) will announce its decision on monetary policy on Wednesday, while the European Central Bank (ECB) will follow on Thursday. At the same time, the United States (US) will release the preliminary estimate of the Q4 Gross Domestic Product (GDP). Annualized growth is foreseen at 2.8%, easing from the 3.1% posted in Q3 yet still indicating healthy progress.
XAU/USD short-term technical outlook
From a technical point of view, XAU/USD seems to be correcting overbought conditions. In the daily chart, technical indicators retreat from extreme peaks, heading firmly lower albeit well above their mid-lines, not enough to support a sustained bearish continuation. At the same time, the 20 Simple Moving Average (SMA) maintains a bullish slope, providing dynamic support at around $2,687.70. The 100 and 200 SMAs, in the meantime, have lost their upward strength, far below the shorter one.
In the near term, and according to the 4-hour chart, XAU/USD is poised to extend its slide. The pair accelerated sharply lower once it broke below a now bearish 20 SMA. At the same time, technical indicators head south almost vertically within negative levels without showing signs of downward exhaustion. Still, Gold remains far above its 100 and 200 SMAs, supporting the case of an ongoing correction rather than anticipating a continued slide.
Support levels: 2,724.60 2,712.90 2,700.00
Resistance levels: 2,747.30 2,764.85 2,777.30
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