Gold Price Forecast: XAU/USD steady at around $1,938

XAU/USD Current price: $1,938.47

• News related to the Chinese housing sector boosted the mood at the beginning of the week.
• The market sentiment worsened during London trading hours following soft macro data.
• XAU/USD is neutral-to-bearish in the near term, immediate support at $1,933.30.

XAU/USD trades with a softer tone on Monday, little changed for a third consecutive day and currently trading at around $1,938 a troy ounce. A holiday in the United States (US) and Canada limits volatility across the FX board at the beginning of the week,  with the US Dollar finding some demand ahead of London’s close amid the poor performance of European indexes.

Financial markets started the week with modest optimism, as reflected by the positive tone of Asian equities. The better mood followed news coming from China, as Existing Home Sales in Beijing and Shanghai soared, according to CGS-CIMB Securities, somehow suggesting government efforts to revive the local economy have a positive impact.

The sentiment deteriorated as the day went by, as Euro Zone data missed expectations, while European Central Bank (ECB) authorities suggested monetary tightening will continue in the upcoming months. ECB President Christine Lagarde spoke at the Distinguished Speakers Seminar organized by the European Economics & Financial Centre, making no references to September’s decision. Still, she reiterated that inflation remains too high in the Euro Zone. Additionally, the President of the Deutsche Bundesbank, Joachim Nagel, also said that inflation is “still much too high.”

XAU/USD price short-term technical outlook

The daily chart for the XAU/USD pair shows it remains below the 61.8% Fibonacci retracement of its latest daily slump at $1,944.85, the immediate resistance level. Gold peaked at around a mildly bearish 100 Simple Moving Average (SMA) on Friday, now at around $1,953.55. The same chart shows that the 20 and the 200 SMA converge at around $1,915, with the shorter one losing upward momentum. Finally, technical indicators remain within positive levels but lack directional strength.

The 4-hour chart shows an increased bearish potential. XAU/USD started the day above a flat 20 SMA but is developing below it. At the same time, the Momentum indicator crossed its midline into negative territory and currently consolidates below its 100 level, while the Relative Strength Index (RSI) indicator hovers around 51. The next Fibonacci support is at 1,933.30, the 50% retracement, and the level to break to confirm a downward extension.

Support levels: 1,933.30 1,921.80 1,907.30  

Resistance levels: 1,944.85 1,955.80 1,972.40  

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