The XAU/USD pair recently broke out of an upward channel, indicating that it may be overbought and due for a pullback. This came after reaching a new all-time high of $2,195, now trading at $2,175. The upcoming release of US inflation figures is expected to shake the markets further. A higher inflation rate could potentially strengthen the US dollar and impact the price of gold, while a lower figure may weaken the USD.
As the Federal Reserve is anticipated to deliver a 75-bps rate cut this year, the reaction of gold prices remains uncertain. Technical analysis shows that XAU/USD is currently in a corrective phase and may target the weekly pivot point of $2,151 as a potential downside level. A valid breakdown below this support could trigger larger downward movements.
The recent price action and potential market volatility highlight the importance of staying updated on economic data releases and technical indicators when trading XAU/USD. Additionally, considering the risks involved in trading CFDs, it’s crucial for investors to assess their risk tolerance before engaging in forex trading activities.
