XAU/USD Current price: $2,019.71
- Market players await news related to the US debt ceiling extension for direction.
- The US Dollar is trapped between rising equities and higher Treasury yields.
- XAU/USD extended its recovery towards $2,020, further gains not yet clear.
Spot gold trades with modest gains at around $2,020 a troy ounce in a slow start to the week. XAU/USD advances amid easing US Dollar demand amid a better market mood. Nevertheless, caution persists as United States authorities extend debt ceiling-related negotiations. As the macroeconomic calendar remained light, speculative interest focuses on a potential US default. President Joe Biden announced he would meet with lawmakers on Tuesday in an attempt to reach a deal.
Meanwhile, stock markets trade in the green, although momentum is nowhere to be found. The Dow Jones and the S&P500 are up less than 0.10%, while the Nasdaq Composite is the best performer, up 56 basis points (bps). At the same time, government bond yields are also up, with the 10-year Treasury note yielding 3.51%, up 4 bps, and the 2-year note offering 4.0%, unchanged for the day. Higher US yields limit the bullish potential for XAU/USD.
XAU/USD price short-term technical outlook
The daily chart for the XAU/USD pair offers a neutral-to-bullish stance. A flat 20 Simple Moving Average (SMA) provides support at around $2,008.70, while the longer moving averages maintain their bullish slopes far below the level. Technical indicators, in the meantime, remain directionless within positive levels, skewing the risk to the upside, but without confirming another leg north.
In the near term, and according to the 4-hour chart, the pair is neutral. On the one hand, the Momentum indicator advances but stands just below its midline, while the Relative Strength Index (RSI) remains directionless around the 50 level. On the other hand, XAU/USD met buyers around a flat 100 SMA and is currently battling to overcome a mildly bearish 20 SMA, suggesting limited buying interest. Bulls could have better chances if Gold extends its rally beyond $2,029.10, the immediate resistance level.
Support levels: 2,008.70 2,000.00 1,987.45
Resistance levels: 2,029.10 2,040.35 2,059.60
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