XAU/USD Current price: $2,344.67
- Easing government bond yields provided near-term support to the bright metal.
- The US March Consumer Price Index will be out on Wednesday.
- XAU/USD corrects near-term overbought conditions, bull retain control of the pair.
Spot Gold hit $2,365.25 on Tuesday, a fresh record high amid persistent US Dollar’s weakness. The Greenback stayed the day on the back foot at the beginning of the week despite soaring government bond yields. The 10-year Treasury note offered as much as 4.50% at some point Monday, providing support to XAU/USD. Yields gave up with the new day, but not Gold, now benefiting from the sour tone of Wall Street and increased demand for safety ahead of vital macroeconomic events.
Wall Street turned negative ahead of the release of the United States (US) Consumer Price Index (CPI) on Wednesday, as the figures could decide whether the Federal Reserve (Fed) will be able to cut rates in June. Hotter-than-anticipated CPI figures in January and February undermined investors’ confidence in three rate cuts this year, and currently, markets believe the central bank will likely deliver two, with the first one potentially coming in July. Speculative interest is a thorn between a healthy economy resulting in better and higher profits and the need for easing costs amid record-high rates.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows the pair posted a third consecutive higher high after a modest corrective decline, maintaining extreme overbought conditions. Technical indicators stand at multi-month highs, partially losing their upward strength but still short of confirming an interim bottom. In the same time frame, moving averages maintain their firmly bullish slopes, with the 20 Simple Moving Average (SMA) over $100 below the current level but still far above the 100 and 200 SMAs. Overall, it is clear that buyers retain control.
In the near term, and according to the 4-hour chart, overbought conditions have begun weighing on XAU/USD. Technical indicators retreated from their recent highs, and particularly, the Momentum is positing lower highs as price posts higher ones, a divergence that could anticipate another leg south. At the same time, the pair develops above the bullish moving average, which shows no sign of giving up. Gold would need to lose roughly $200 to confirm a steep decline from there, with short-lived bearish corrections expected.
Support levels: 2,332.50 2,318.60 2,303.80
Resistance levels: 2,365.00 2,380.00 2,400.00
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