XAU/USD Current price: $2,562.90
- Better than-anticipated United States data maintained investors cautiously optimistic.
- The Federal Reserve will announce its decision on monetary policy on Wednesday.
- XAU/USD is poised to extend its decline in the near term, bulls may surge on dips.
Gold price is marginally lower on Tuesday, with XAU/USD trading in the $2,560 region in the American session. The US Dollar gathered modest strength ahead of Wall Street’s opening amid better-than-anticipated United States (US) data. Local indexes hold on to modest gains, reflecting the optimistic mood that undermines demand for the safe-haven metal.
Still, financial boards’ activity is limited ahead of major central banks’ announcements. The Federal Reserve (Fed) will kick-start the wave of announcements on Wednesday, followed by the Bank of England (BoE) on Thursday and the Bank of Japan (BoJ) on Friday. The Fed is widely anticipated to trim interest rates for the first time in years, a movement that has been priced in long ago. The BoE, on the other hand, will likely remain on hold while speculative interest sees the BoJ hiking rates.
In anticipation of the Fed, speculative interest has priced in a 25 basis points (bps) rate cut, although there are some hopes the central bank will go for a wider trim of 50 bps. The level of aggressiveness from US officials will determine what will happen with Greenback on Wednesday. The more dovish the decision, meaning a 50 bps trim and anticipation of more cuts coming, the more will suffer the USD. The US Dollar, on the other hand, can recover sharply should the central bank deliver a more hawkish stance.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair shows the slide seems corrective. The pair keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) partially losing its bullish strength but well above the longer ones, at around $2,520. Technical indicators, in the meantime, remain well above their midlines, although lacking clear directional strength. The Relative Strength Index (RSI) indicator eases from near overbought readings but not enough to anticipate a steeper decline.
In the near term, however, the risk skews to the downside. In the 4-hour chart, XAU/USD has broken below a bullish 20 SMA, while the 100 and 200 SMAs aim marginally higher, far below the current level. Finally, technical indicators aim south almost vertically, currently challenging their midlines and hinting at another leg south, particularly if Gold pierces the intraday low at $2,561.65.
Support levels: 2,561.65 2,550.00 2,542.40
Resistance levels: 2,574.80 2,590.00 2,605.00
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