XAU/USD Current price: $2,514.13
- Upcoming first-tier events in the United States and central banks’ announcements spur caution.
- US Treasury yields touched fresh one-year lows and aim to extend their slides.
- XAU/USD consolidates gains above $2,500 with a neutral technical stance.
Gold extended its recovery on Tuesday, trading around $2,513 a troy ounce mid-US session. Financial markets turned risk-averse ahead of first-tier events, resulting in a firmer US Dollar against major rivals except for safe-haven ones. Gold, the Swiss Franc and the Japanese Yen post modest advances vs the American currency as Wall Street dipped.
There has not been a specific catalyst for the souring mood, but caution ahead of the release of the United States (US) Consumer Price Index (CPI) on Wednesday and the European Central Bank (ECB) monetary policy decision on Thursday. About the first, market players are expecting easing price pressures, yet inflation holds above the Federal Reserve (Fed) goal of around 2%. Nevertheless, the Fed is scheduled to announce its decision on monetary policy next week and most likely trim interest rates by 25 basis points (bps).
Meanwhile, US Treasury yields retreat. The 10-year note offers 3.66% after bottoming at 3.64%, a fresh 52-week low. The same happens with the 2-year note, now yielding 3.62% after bottoming at 3.59%.
XAU/USD short-term technical outlook
The daily chart for XAU/USD offers a neutral-to-bullish stance, with the pair still meeting intraday buyers around a bullish 20 Simple Moving Average (SMA). Technical indicators, in the meantime, lack directional strength, with the Momentum indicator stuck around its 100 line and the Relative Strength Index (RSI) indicator consolidating at around 58. Finally, the 100 and 200 SMAs keep grinding higher, far below the current level, limiting the bearish potential in the wider perspective.
For the near term, the 4-hour chart offers a neutral stance. XAU/USD trades above its 20 and 100 SMAs, while the 200 SMA advances far below the current level. Technical indicators have turned flat, reflecting the absence of directional conviction, although the fact that the RSI indicator stands at 56 suggests bears have no interest in Gold.
Support levels: 2,507.60 2,489.60 2,475.70
Resistance levels: 2,519.75 2,531.60 2,545.00
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