Gold Analysis: Broad XAU range-play to prevail

XAU/USD pair – Daily Chart

Gold prices in terms of US dollar (XAU/USD) rebounded sharply on Monday from close to fresh monthly lows at 1178.56 and pierced through the channel resistance at 1201.73 levels, hitting fresh five-day highs at 1207.17. The pair managed to close the day just shy of 1200 barrier, at 1199.83 levels. The huge swing in XAU/USD was witnessed largely on the back of yet another weak US macro data – services PMI reading which added to the prevailing broad USD weakness, boosting the XAU bulls. The recent weak US data eased bets of a June rate-hike ahead of Wednesday’s FOMC statement.

Currently, XAU/USD clings to the channel resistance-turned support located at key 1200 levels with the downside cushioned by 20-DMA support located at 1199.73. The pair did breach the last, however quickly bounced-off lows and rebounded higher to trade now at 1201.09 levels. The pair trades in slim range, consolidating previous gains, as markets remain cautious as the Fed starts its 2-day policy meeting later today. The daily RSI at 53 in the bull range has turned slightly flat indicating XAU bulls may take a wait-and–watch approach ahead of FOMC statement due tomorrow. Hence, XAU/USD may largely extend the range play, extending upside to 1207 (April 27 High) levels. To the downside, the pair could retest 20-DMA at 1199.73 levels, below which floors may open for a test of crucial support at 1192.50 levels where 5-DMA and 50-DMA converge.

XAU/EUR pair – Daily Chart

Gold prices in terms of Euro (XAU/EUR) reversed previous losses and ended higher on Monday at 1103.15 levels, having bounced-off lows at 1084.87 and extended gains to 1107.86 highs. The pair rallied after US data missed markets expectations, raising hopes of a delayed Fed rate-hike. This boosted XAU bulls across the board. However, the gains were capped at 10-DMA located at 1109 levels and the pair deflated from highs as a softer US dollar boosted the shared currency which eventually dragged XAU/EUR.

Currently, the pair seems to have found good support at 5-DMA located at 1100.65 levels, with XAU/EUR trading comfortably around 1103 levels. The pair extends in a narrow range with the upside restricted to 10-DMA resistance at 1109.11 and the downside cushioned by 5-DMA. At the moment, the daily RSI trades flat just below the mid lines in the bear range suggesting a potential for a break in either direction. To the upside, a break above 10-DMA, the pair may extend to 20-DMA located at 1113.70 levels. On the other hand, if the pair fails to hold 5-DMA support, the next immediate support to be tested could be 50-DMA located at 1095.60. Overall, in absence of major EUR economic releases, the pair may track US dollar moves for further momentum.

XAU/JPY pair – Daily Chart

Gold prices in terms of Japanese yen (XAU/JPY) rebounded sharply on Monday, settling the day higher, after a volatile US session. The XAU/JPY pair pared initial gains and fell in red during the NA session after the yen strengthened following disappointing US data. The pair retraced from 143,550 highs and ended finally at 142,930, failing to hold above 143k levels.

XAU/JPY remains elevated around 143k threshold, clinging to crucial 50-DMA support placed at 142,838 levels. The daily RSI is dead flat at 50 indicating no clear direction at the moment and that the pair awaits fresh incentives in the day ahead. To the upside, the pair faces immediate resistance at 20-DMA located at 143,400 levels beyond which the pair could test 144k barrier. To the downside, a breach of 50-DMA support may knock-off XAU/JPY to the next support at 5-DMA placed at 142,260 levels. Overall, the pair may remain range bound correlating the moves in the USD/JPY pair.