- XAU/USD consolidated Friday’s gains and found strong resistance at the 200-day SMA around $1,930.
- US Treasury yields continue to rise and weigh on the precious metal.
- Geopolitical tensions in the Middle East may limit the downside potential.
At the beginning of the week, the XAU/USD retreated towards $1,920 and consolidated Friday’s rally, which saw the spot price rising by more than 3%.
Markets will remain quiet on Monday, and investors await Tuesday’s Retail Sales figures from the US from September to continue placing their bets on the Federal Reserve's (Fed) next decisions. As for now, US Treasury yields are rising and may suggest that markets are gearing up for one more hike by the Fed in 2023, and as long as hawkish bets remain elevated, the yellow metal may have difficulty finding demand. The 2, 5 and 10-year yields rose to 5.08% and 4.70%, with all three seeing more than 0.50% increases.
On the positive side, tensions escalate in the conflict between Israel and Hamas, and the precious metal may benefit from market participants seeking refuge in safe-haven assets.
XAU/USD Levels to watch
Considering the daily chart, XAU/USD presents a neutral to bullish outlook, with the bulls gaining significant ground last week. Despite pointing south, the Relative Strength Index (RSI) jumped to positive territory on Friday, while the Moving Average Convergence (MACD) histogram prints larger green bars. In the larger context, the price got rejected by the 200-day Simple Moving Average (SMA) at $1,930 but managed to close above the 20 and 100-day Averages, indicating that the overall trend is favouring the buyers.
Support levels: $1,910, $1,900, $1,880.
Resistance levels: $1,930 (200-day SMA), $1,950, $1,970.
XAU/USD Daily Chart
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