XAU/USD pair
Gold prices in terms of US dollar (XAU/USD) pierced through the 5-DMA located at 1095.60 and advanced to fresh daily highs at 1105.08 before wiping-out all gains and ending Monday in the red at 1094.30. Gold prices received fresh support from the renewed China slowdown fears led risk-aversion and swung back higher above 1100 threshold during European hours. However, all the gains were washed away as the pair edged lower following solid US durable goods orders data which further bolstered the case for Sept rate-hike bets ahead of Wednesday’s FOMC statement.
A for today’s trade in running, XAU/USD seems to be swinging in a narrow range, unable to find clear direction amid a data-quiet Asian and European session ahead. While US calendar also remains data-light with only consumer confidence numbers to be reported later tonight. The main focus now remains Wednesday’s FOMC statement which is likely to provide some hints on the timings of the Fed rate while changes in the Fed’s language are widely anticipated by the markets. Moreover, squaring up off USD longs ahead of FOMC could offer some support to the XAU/USD pair.
Technically, its clearly visible on the daily charts that XAU/USD looks for direction as it has formed a small doji while the daily RSI at 22 has turned flat. While on hourly charts, the pair extends in a tight channel, finding good support at hourly 50-SMA located at 1092.50 and the upside restricted by hourly 20-SMA located at 1095.88. The pair is likely to maintain its side-trend today ahead of the key FOMC decision. To the upside, the pair could rise to 1100 levels beyond a break of hourly 20-SMA, opening doors for a retest of channel resistance located at 1105 levels. The pair faces strong resistance near the last and may rebound lower to the crucial hourly 50-SMA support. The hourly RSI at 47.60 has inched higher indicating further room for upside. A break below hourly 50-SMA, the pair could drop to 1088.55 (July 27 Low).
XAU/EUR pair
Gold prices in terms of Euro (XAU/EUR) reversed previous gains and fell back in the red on Monday, settling the day at 986.67. The pair witnessed steep losses and mired near multi-month lows after the EUR/USD pair was strongly bid on USD longs squeeze ahead of Wednesday’s Fed decision. Moreover, the euro was boosted on upbeat German Ifo data which further pressured XAU/EUR.
Currently, XAU/EUR oscillates in a slim range, consolidating previous losses as the EUR/USD remains broadly muted amid lack of fresh fundamental triggers expected from the European session ahead. The US dollar may remain pressured on the back of risk-aversion as China stocks rout extends on Tuesday. This is likely to benefit the EUR bulls weighing down on XAU/EUR.
Technically, XAU/EUR poses a weak recovery as for now with the daily RSI at 25 tilted slightly higher. Hence, to the upside, the pair could attempt a bounce to 5-DMA located at 993, beyond which 1000 levels brings in the next key resistance. A failure to breach the 5-DMA, the pair could fall back towards 984.21 (July 27 Low), below which floors open for a test of 981.68 (July 24 Low).
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