XAUUSD Current price: $1,852.40
- US inflation rose by more than anticipated in April, triggering demand for gold as a hedge.
- Wall Street seesaws between gains and losses while government bond yields retreat.
- XAUUSD trades positively, but further gains seem unlikely from a technical perspective.
Spot gold recovered from a fresh three-month low of $1,831.98 a troy ounce, currently trading above the 1,850 level. The American dollar soared following the release of the latest inflation figures, as the annual Consumer Price Index printed at 8.3%, higher than the 8.1% anticipated. The monthly increase was 0.3% against the 0.2% expected. Finally, the annual core CPI hit 6.2%, slightly below the previous 6.5%, but above the 6% expected. Investors were hoping for confirmation inflation would have peaked, but such numbers hint at a long battle ahead to tame price pressures.
The news spurred risk aversion, sending stocks sharply lower and the greenback firmly up. However, Wall Street managed to bounce from its intraday lows, helping XAUUSD to turn positive. Meanwhile, US government bond yields advanced amid concerns related to persistently high inflation but also gave up within US trading hours. The yield on the 10-year Treasury note hit an intraday high of 3.07%, now at around 2.95%.
Gold Price short-term technical outlook
The daily chart for XAUUSD shows that the advance is a mere correction. The bright metal posted three consecutive lower lows and lower highs, in line with a bearish continuation. Gold Price bounced from a flat 200 SMA, acting as dynamic support around $1,835.30 while developing well below the shorter moving averages. Technical indicators, in the meantime, have barely bounced from near oversold readings, without strength enough to confirm a bullish continuation.
The 4-hour chart shows that a bearish 20 SMA capped the upside as the indicator heads south below the longer ones. The Momentum indicator advances within negative levels, but the RSI indicator has stabilized around 44, suggesting limited buying interest. An advance beyond $1,862.10 is needed to attract more buyers, although selling interest will likely increase on approaches to the $1,890 price zone.
Support levels: 1,835.30 1,825.40 1,813.70
Resistance levels: 1,862.10 1,873.00 1,885.65
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