XAU/USD Current price: $1,980.30
- Mixed US employment data fueling back-and-forth speculation of Fed's next movement.
- Optimism prevails after the dust settles, with the US Dollar under intense selling pressure.
- XAU/USD gains bullish traction but still faces critical resistance at around the $2,000 level.
The US Dollar seesawed between gains and losses throughout the first half of Thursday as investors assessed news coming from the United States (US). The American currency finally capitulated and is under strong selling pressure, with XAU/USD now changing hands at around $1,980 a troy ounce.
The day started with optimism, as the US House of Representatives passed the bill to suspend the debt-limit ceiling, erasing the government's borrowing limit until January 2025. The better market mood weighed on the USD, which later recovered on signs of a strong labor market. The Greenback advance was short-lived, and within the employment-related data released on Thursday, the country released a robust downward revision of Q1 Unit Labor Costs, down to 4.2% in the three-month to March from 6.3% previously.
On the one hand, a strong labor market adds pressure on the Federal Reserve to maintain its aggressive monetary policy. On the other hand, easing wages pressures take off such steam, as it signals inflation continues to decline. Furthermore, the May ISM Manufacturing PMI contracted to 46.9, from 47.1 and worse than anticipated, indicating the economy remains fragile and limiting the central bank's manoeuvre capacity.
XAU/USD price short-term technical outlook
XAU/USD peaked at $1,983.09, holding nearby as speculative interest finishes digesting the news. The daily chart shows it posted a fourth consecutive higher high, usually a sign of further gains ahead. However, the pair keeps developing below a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around $1,984.30. At the same time, the pair is further recovering from a mildly bullish 100 SMA while technical indicators extend their advances, although below their midlines. Gold faces strong psychological resistance at the $2,000 threshold and may falter in a first attempt to move beyond it.
Meanwhile, XAU/USD is nearing the 38.2% Fibonacci retracement of its latest daily slide at $1,987.65, an immediate barrier on its way towards $2,000. The 4-hour chart shows that the pair has bounced from a now bullish 20 SMA and is currently trying to overcome a still bearish 100 SMA. Finally, technical indicators remain well into positive territory, the Momentum retreating, but the Relative Strength Index (RSI) still advancing at around 64. Further gains are likely near term, particularly if the positive mood persists.
Support levels: 1,966.20 1,953.60 1,944.40
Resistance levels: 1,987.65 2,003.50 2,014.90
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.