Gold Price Forecast: XAU/USD eases from record highs, additional losses still unclear

Valeria Bednarik FXStreet

XAU/USD Current price: $2,164.17

The US Consumer Price Index was slightly higher than anticipated in February.
Stock markets shrugged off the discouraging CPI readings, Wall Street posts firm gains.
XAU/USD could extend its corrective slide towards the 2,145 price zone.

Spot gold ended its winning streak and trades around $2,164.00 a troy ounce, as the US Dollar advanced late Monday amid a cautious mood, extending gains on Tuesday after the release of the United States (US) Consumer Price Index (CPI). The Bureau of Labor Statistics (BLS) reported the CPI was up 3.2% YoY in February, slightly above the 3.1% anticipated by market players. The core reading, which excludes volatile food and energy prices, printed at 3.8%, higher than the 3.7% expected, although below the 3.9% posted in January.

The figures triggered some near-term USD demand while also boosting government bond yields. However, stocks also advanced, with Wall Street’s three major indexes firmly up amid a rally in the tech sector. Equities´ strength somehow limited USD gains through the FX board, although the American currency is up vs all its major rivals.

Earlier in the day, the United Kingdom (UK) reported that the ILO Unemployment Rate rose to 3.9% in the three months to January, higher than the 3.8% posted in December, according to the Office for National Statistics (ONS). Furthermore, the number of people claiming jobless benefits rose by 16.8K in February, much higher than the 3.1K in January, although below the 20.3K anticipated by market participants. The figures undermined demand for the British Pound, further supporting the Greenback.

At the end of the day, US data failed to impress. The news barely affected the odds of a June rate cut from the Federal Reserve (Fed), with market participants still waiting for a clearer picture.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for the XAU/USD pair shows the pair finally began correcting extreme overbought conditions, although that does not dismiss the chance of a higher high. The pair trades above the 23.6% retracement of the latest bullish run measured between $1,984.03 and $2,195.22, at $2,145.17.

Technical indicators head south but remain within the overbought territory, while the bright metal keeps developing far above its moving average. The 20 Simple Moving Average (SMA) heads firmly north at around $2,071, just a handful of $ above the 61.8% retracement of the aforementioned rally and a potential bearish target should the USD gain momentum.

The 4-hour chart shows XAU/USD is currently developing below a flat 20 SMA, providing near-term resistance at around $2,172. At the same time, the longer moving averages maintain their bullish slopes far below the current level, suggesting the pair may resume its advance. Finally, technical indicators stand in neutral territory, with the Momentum indicator heading lower but the Relative Strength Index (RSI) indicator turning flat at around 52, hinting at receding selling interest.

Support levels: 2,166.10 2,145.10 2,134.70

Resistance levels: 2,172.00 2,189.00 2,195.30

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.