XAU/USD Current price: 2,023.15
- Continued upward pressure in government bond yields underpins the US Dollar.
- Upbeat United States data further weighed on March rate cut odds.
- XAU/USD retreated further on broad US Dollar's strength, returned to its comfort zone.
XAU/USD is under strong selling pressure on Monday amid broad US Dollar's strength. The Greenback extends the rally triggered last week by the United States (US) Federal Reserve (Fed) monetary policy decision and upbeat employment figures. On the one hand, Fed Chair Jerome Powell dismissed the odds for a March rate cut, spurring risk aversion. On the other hand, the Nonfarm Payrolls (NFP) report was much stronger than expected, further diminishing the chance of a soon-to-come rate cut.
At the beginning of the new week, government bond yields resumed their advances, underpinning the US Dollar in a much quieter week regarding macroeconomic releases. At the time of writing, the 10-year Treasury note offers 4.16%, up roughly 14 basis points (bps), while the 2-year note yields 4.47%, up 10 bps from Friday's close.
Meanwhile, stock markets changed course. After spending most of the day in the green, European indexes ended the day in the red. As per Wall Street, the three major indexes trade firmly in the red, with the Dow Jones Industrial Average being the worst performer, down roughly 1%.
Finally, the USD got an additional boost from upbeat local data. The ISM Services Producer Manager Index (PMI) jumped to 53.4 in January from a downwardly revised 50.5 in December, above the expected 52. On a negative note, "The Prices Index registered 64 percent in January, a 7.3-percentage point increase from December's seasonally adjusted reading of 56.7 percent," a red flag on inflation, yet supportive of the delay in rate cuts.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair now offers a neutral stance as it returned to the $2,020 price zone. In the mentioned chart, the pair is currently developing below a flat 20 Simple Moving Average (SMA), providing near-term resistance at $2,029.90. XAU/USD holds well above a bullish 100 SMA, limiting the longer-term bearish potential, although the Relative Strength Index (RSI) indicator heads firmly south at around 47, anticipating another leg lower.
In the near term, and according to the 4-hour chart, the risk skews to the downside. Gold develops below all its moving averages, and the 20 SMA accelerated south, although still holding above directionless longer ones. Technical indicators, in the meantime, have bounced from near oversold readings, aiming north within negative levels, not enough to confirm an upcoming recovery.
Support levels: 2,022.75 2,009.10 1,988.90
Resistance levels: 2,029.90 2,039.60 2,053.10
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
AUD/USD: Further advance needs to clear 0.6300
AUD/USD added to Wednesday’s marginal uptick and came closer to the key resistance at 0.6300 on the back of the persistent offered bias in the US Dollar and the broad-based recovery in the risk-associated universe.
EUR/USD looks at PMIs for potential extra gains
EUR/USD quickly left behind Wednesday’s small decline and resumed the upside beyond 1.0400 the figure in response to the renewed downward trend in the Greenback ahead of key flash PMIs due on Friday.
Gold continues rally amid trade uncertainty
Gold extends its correction from the multi-month high it set above $2,760 on Wednesday and trades below $2,740 on Thursday. The 10-year US Treasury bond yield stays in positive territory above 4.6% after of US data, not allowing XAU/USD to regain its traction.
Dogecoin Price Forecast: Will Bitwise ETF filing drive DOGE to $1?
Dogecoin price declined 5% on Wednesday, trading as low as $0.35 on Binance. Recent movements signal a sell-the-news frenzy after a cluster of bullish catalysts emerged within the DOGE markets this week.
Federal Reserve set for an extended pause
After 100bp of rate cuts the Fed has signalled it needs evidence of economic weakness and more subdued inflation prints to justify further policy loosening. President Trump’s low tax, light-touch regulation policies should be good news for growth.
Trusted Broker Reviews for Smarter Trading
VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.