XAU/USD Current price: $2,312.55
- Financial markets trade on sentiment after the European Parliament election.
- The United States Federal Reserve takes centre stage in a data-packed week.
- XAU/USD bounced from below $2,300, but a firmer recovery is out of the picture.
XAU/USD consolidates its recent losses around the $2,300 threshold on Monday, as fears fuel demand for the US Dollar and Gold. The pair plummeted on Friday, initially hit by news that the People’s Bank of China (PBoC) paused gold purchases in May after 18 months of buying and later amid resurgent US Dollar demand on the back of a stronger-than-anticipated Nonfarm Payrolls (NFP) report.
Over the weekend, the focus was on the European Parliament election, which saw a significant increase in votes for far-right parties, pushing financial markets into risk-averse mode at the beginning of the week. XAU/USD posted an intraday low of $2,287.65, holding above Friday’s bottom. European indexes settled in the red, although the better tone of Wall Street has helped XAU/USD recover some ground, now trading at around$2,310. Somehow, fears receded, although caution prevails.
The macroeconomic calendar had nothing relevant to offer, with the focus on first-tier events scheduled for later this week. Next Wednesday, the United States (US) will start the day by publishing the May Consumer Price Index (CPI), while the Federal Reserve (Fed) will announce its decision on monetary policy and fresh economic projections later in the day. The Bank of Japan (BoJ) monetary policy decision is also scheduled for this week, alongside monthly employment data from the United Kingdom (UK) and Australia.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows its trading at the lower end of Friday’s range, with the risk still skewed to the downside. Technical indicators are bouncing just modestly from near oversold readings, without enough strength to anticipate another leg higher. At the same time, XAU/USD develops well below a flat 20 Simple Moving Average (SMA) while the longer ones maintain their upward slopes far below the current level.
In the near term, and according to the 4-hour chart, the technical picture is quite similar. Technical indicators are correcting oversold conditions but remain well into negative territory and with limited upward strength. At the same time, XAU/USD develops below all its moving averages, with the 20 SMA gaining downward traction below the longer ones, limiting the chances of a steeper recovery.
Support levels: 2,300.00 2,286.60 2,272.90
Resistance levels: 2,315.50 2,328.40 2,342.35
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