The current price of XAU/USD is 2,030.25, and investors are hoping that easing inflation readings will lead to a potential rate cut by the Federal Reserve. US Treasury yields are increasing ahead of the release of the US Consumer Price Index, which is impacting the XAU/USD. Despite renewed US Dollar demand, the XAU/USD remains in a neutral position.
The spot gold market continues to trade within familiar levels, with XAU/USD staying at the lower end of Monday’s range. The US Dollar gained momentum following a drop in stock prices on Wall Street, reflecting a negative market sentiment. However, gains are limited as market participants await key macroeconomic data.
Speculation surrounds the potential for the Federal Reserve to start reducing interest rates, with the release of the Consumer Price Index figures next Thursday expected to provide further clarity. Economic data related to employment in the US indicates a relatively tight labor market, which could lead to higher inflation and challenge the Fed’s tightening policy. This in turn could pose a risk to the US economy, and a rate cut may be necessary to mitigate this risk.
US Treasury yields are advancing, supporting the rise in the USD. The 10-year yield stands above 4%, while the 2-year note offers 4.37%.
From a technical perspective, the XAU/USD is retreating from an intraday high of $2042.09 and is trading around $2,030. Technical readings suggest a downside risk, with the pair below a directionless 20 Simple Moving Average in the daily chart. However, the 100 and 200 SMAs provide long-term dynamic support around $1,962. In the near term, bears are in control according to the 4-hour chart, with the pair trading below all its moving averages.
Overall, the XAU/USD remains in a neutral position, with support levels at 2,016.60, 1,998.65, and 1,987.20, and resistance levels at 2,036.00, 2,052.30, and 2,065.45.
Insight: The market sentiment surrounding the XAU/USD is heavily influenced by speculation about Federal Reserve policy and economic data releases. The potential for a rate cut and the impact of inflation on the US economy are key factors shaping the movement of the XAU/USD. Additionally, technical indicators suggest a downside risk in the near term, but the overall outlook remains neutral. Traders and investors will closely monitor future economic data and Fed statements to gauge potential movements in the XAU/USD.
