XAU/USD Current price: 2,030.25
- Investors hope easing inflation readings could help the Fed decide a rate cut.
- US Treasury yields tick north ahead of the US Consumer Price Index release.
- XAU/USD gains bearish traction amid renewed US Dollar demand, remains neutral.
Spot gold keeps trading within familiar levels, with XAU/USD staying at the lower end of Monday’s range. The US Dollar gathered momentum after Wall Street’s opening as stocks edged sharply lower, reflecting a dismal market mood, although gains are restricted ahead of key macroeconomic figures.
Market players hope the United States Federal Reserve (Fed) will soon start trimming interest rates, but await for the Consumer Price Index (CPI) figures to be out next Thursday to further support such a view. Over the past week, American employment-related data indicated the labor sector remains relatively tight, which may end up pushing inflation higher, undermining the Fed’s tightening policy. At the same time, the pair has pushed rates to multi-year highs, which risks a major economic setback.
The central bank is at a point where hiking rates seems a major risk for economic progress compared to the benefits it may bring in taming price pressures. That’s why inflation-related data is so relevant this week. If the CPI eases more than anticipated, the figures will somehow “confirm” that the Fed will proceed with rate cuts. At the time, speculative interest believes there’s a good chance for a cut as soon as March.
Meanwhile, US Treasury yields advance, supporting USD advance. The benchmark 10-year yield stands above 4%, while the 2-year note offers 4.37%.
XAU/USD short-term technical outlook
XAU/USD trades around $2,030, retreating from an intraday high of $2042.09. Technical readings in the daily chart show that the risk skews to the downside, with the pair developing below a directionless 20 Simple Moving Average (SMA). Meanwhile, the 100 and 200 SMAs converge around $1,962, providing long-term dynamic support. Finally, technical indicators turned marginally lower but remain within neutral levels without enough directional strength to confirm another leg south.
In the near term, however, and according to the 4-hour chart, bears are in control. The pair trades below all its moving averages while technical indicators gain downward traction below their midlines. The 20 SMA gains downward traction between the longer ones, providing near-term resistance at around $2,036.
Support levels: 2,016.60 1,998.65 1,987.20
Resistance levels: 2,036.00 2,052.30 2,065.45
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