XAU/USD pair
Gold prices in terms of US dollar (XAU/USD) breached the hourly 50-DMA located at 1092.50 and printed lows at 1091.59 on Tuesday, only to recover and end the day in green at 1095.92. The pair spiked to 1099.06 highs after US consumer confidence data surprised markets on the downside, playing down slightly on Fed rate-hike chatter. While the downside remained cushioned as markets expected concerns over China slowdown will cause Fed to push back it rate lift-off stance.
A for today’s trade in running, XAU/USD manages to hold above the 5-DMA located at 1095.32 and trades higher at 1096.70 levels. The pair extends recovery from the previous session as USD bulls have taken a back seat, unwinding USD longs after recent strength. Although further upside in XAU/USD remains completely dependent on the FOMC decision due later tonight, which is widely expected to be a non-event. Although fresh cues on the interest rates outlook will be closely watched for further USD moves.
Technically, on daily charts, the pair continues to cling to the 5-DMA with the daily RSI at 25 aiming higher, which indicates further room for recovery. While on hourly charts, the pair continues to trade around a flat line and trades above most hourly moving averages, finding good support at hourly 100-SMA located at 1094 levels. The hourly RSI at 56 has inched higher suggesting further upside likely.
The pair is expected to continue side-ways although supported ahead of the key FOMC decision. To the upside, the pair could rise to 1100 levels, beyond which doors open for a test of hourly 200-SMA located at 1103.10 and from there to the trend line resistance located at 1105. The pair is expected to remain supported so long as it holds above hourly 100-SMA. However, a hawkish Fed statement may spur USD rally, knocking-off XAU/USD lower towards five-year lows reached at 1176.77 on July 24.
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