XAU/USD Current price: $2,333.65
- Investors await the United States Consumer Price Index for fresh directional clues.
- Federal Reserve officials take centre stage in the absence of relevant macroeconomic data.
- XAU/USD gains near-term bearish traction and aims to retest the $2,300 mark.
Spot Gold traded with a soft tone on Monday, now hovering around $2,335 a troy ounce. XAU/USD hit an intraday high of $2,364.38 before changing course, despite broad US Dollar’s weakness. The American currency shed ground against most major rivals, only firmer vs safe-haven rivals on the back of generally hawkish statements from Federal Reserve (Fed) officials and mounting speculation the central bank won’t cut rates in the near future.
On the one hand, the New York Federal Reserve released its monthly Survey of Consumer Expectations on Monday, which sowed one year ahead, inflation expectations rose to 3.3% vs 3% in March. The report came after the University of Michigan also reported an increase in Consumer Inflation Expectations in May last Friday. On the other hand, Federal Reserve Vice-Chairman Philip Jefferson hit the wires with some hawkish comments, saying inflation is a source of concern for the Fed and that it remains appropriate to maintain the policy rate in restrictive territory.
Other than that, market participants have little news to work with, moreover considering the upcoming release of the United States (US) April Consumer Price Index (CPI) on Wednesday. The CPI is foreseen at 3.4% YoY, slightly below the 3.5% posted in March.
XAU/USD short-term technical outlook
The XAU/USD pair keeps trading around the 23.6% Fibonacci retracement of the April/May rally at $2,326.50, with the failed attempt to regain the upside taking its toll on buyers. The daily chart shows technical indicators turned south, approaching their midlines from above, which is not enough to confirm a bearish extension but reflects decreasing buying interest. At the same time, the pair is hovering around a bearish 20 Simple Moving Average (SMA) while the longer moving averages maintain their bullish slopes far below the current level.
For the near term, the 4-hour offers an increasingly bearish potential. Technical indicators retreated sharply from overbought readings on Friday and approached their midlines with firmly bearish slopes. At the same time, XAU/USD is trading below a mildly bullish 20 SMA, while a bearish 100 SMA converges with the aforementioned Fibonacci level, reinforcing its relevance. A break below the latter should open the door for a test of the $2,300 price zone.
Support levels: 2,326.50 2,310.40 2,298.70
Resistance levels: 2,340.15 2,356.90 2,367.10
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