XAU/USD Outlook: surge to new high and quick pullback suggest that larger bulls may take a breather

Slobodan Drvenica Windsor Brokers

GOLD

Spot gold price spiked to new seven-year high at $1611 in Asia on Wednesday after Iran's rocket attack sparked strong risk safe-haven buying in the market, but gains were short-lived as situation stabilized after America's mild reaction. Renewed risk appetite on fading fears on conflict escalation brought gold price to the levels before the rally and forming daily Doji candle with very long upper shadow. This could be seen as initial signal of stall, with the notion being supported by stochastic indicator forming bearish divergence and reversing from overbought territory; overextended momentum turning sideways and strongly overbought RSI also being flat. Today's spike cracked important barriers at $1586 (Fibo 61.8% of $1920/$1046) and $1600 (psychological) but failure to close above would suggest that the price action faces strong headwinds and may enter consolidation before larger bulls resume. Solid support at $1557/54 (former high of 4 Sep/rising daily Tenkan-sen) should contain extended dips and keep bulls intact. Final break higher would expose targets at $1700 zone (highs of Feb/Jan 2013/psychological/Fibo 76.4%). Traders will closely watch the situation in the Middle-East, but will also focus on Fed speakers on Thursday, which may provide fresh signals about central bank's next steps.

Res: 1586; 1600; 1611; 1630
Sup: 1568; 1557; 1554; 1535

Interested in XAU/USD technicals? Check out the key levels

1. R3 1595.8
2. R2 1584.52
3. R1 1578.16
PP 1566.88
1. S1 1560.52
2. S2 1549.24
3. S3 1542.88

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Australia unemployment rate set to edge up within overall strong labor market

The Australian monthly employment report is scheduled for release on Thursday at 00:30 GMT, and market participants anticipate a modest increase in jobs in January. The Australian Bureau of Statistics is expected to announce that the country added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%, up from the 4.1% posted in December.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.