Gold Price Forecast: XAU/USD holds on to gains above $2,660

XAU/USD Current price: $2,667.29

• The People’s Bank of China resumed Gold buying after a six-month pause.
• United States inflation and central banks’ monetary policy announcements fuel caution.
• XAU/USD recovered its bullish poise, near-term gains limited.

Spot Gold advanced on Monday, trading as high as $2,667.31 a troy ounce during American hours. The bright metal found fresh demand for China after the People’s Bank of China (PBoC) resumed purchasing following a six-month pause. The US Dollar (USD), on the other hand, trades with a soft tone across the FX board as investors gear up for central banks’ announcements and first-tier United States (US) critical data.

The US will publish an update on inflation on Wednesday in the form of the Consumer Price Index (CPI). The Federal Reserve (Fed) prefers to base its decision on the more smoothed Personal Consumption Expenditures (PCE) Price Index, yet with the central bank’s announcement around the corner, market participants will be closely paying attention to the figures.  

Ahead of the Fed, the Bank of Canada (BoC), the Reserve Bank of Australia (RBA) and the European Central Bank (ECB) will also have monetary policy meetings, while in the Fed’s aftermath, it will be the turn of the Bank of Japan (BoJ) and the Bank of England (BoE).

Meanwhile, Wall Street opened with a sour tone, with the three major indexes trading in the red. Government bond yields, on the other hand, ticked marginally higher.

XAU/USD short-term technical outlook

The XAU/USD pair trades near its intraday high, and technical readings in the daily chart support an upward extension. The pair spent the day above a flat 20 Simple Moving Average (SMA), bouncing sharply from the media, usually a sign of mounting buying interest. At the same time, the 100 and 200 SMAs advance well below the shorter one, recovering their bullish poise. Finally, technical indicators bounced from around their midlines, offering modest upward slopes in line with recent resurgent buying.

In the near term, and according to the 4-hour chart, XAU/USD is also poised to extend gains. Buyers are challenging sellers aligned around a directionless 200 SMA while converging 20 and 100 SMAs provided intraday support. Technical indicators, in the meantime, head north above their midlines, albeit with uneven strength.

Support levels: 2,662.50 2,650.40 2,634.70

Resistance levels: 2,676.30 2,690.65 2,704.35