XAU/USD’s current price is at 2,023.62, with Wall Street trading with a softer tone after reaching record highs on Monday. Market participants are awaiting US first-tier data and central banks’ announcements. XAU/USD holds ground, but bears gain confidence amid broad US Dollar strength.
Gold has been trading in a well-limited range on Tuesday, with XAU/USD changing hands just above $2,020 a troy ounce. This surge happened after the US Dollar dropped following fresh record highs on Monday in the S&P 500 and the Dow Jones Industrial Average. Wall Street rallied on hopes the Federal Reserve (Fed) will soon start trimming interest rates after pushing them to multi-decade highs in the pandemic aftermath. Furthermore, signs that the US economy could dodge a recession provided impetus to high-yielding equities.
However, the USD gathered momentum ahead of the American opening, as equities could not maintain their positive tone. US indexes are trading with modest losses as speculative interest paused ahead of earnings reports. Additionally, US figures fell short of market expectations. The Richmond Fed Manufacturing Index printed at -15 in January, much worse than the -7 expected or the previous -11. Attention on Wednesday will be on the Bank of Canada (BoC), which will announce its decision on monetary policy ahead of the US opening.
In terms of XAU/USD’s short-term technical outlook, the daily chart shows the pair retreated sharply after nearing a bearish 20 Simple Moving Average (SMA) at around $2,040.30. The longer moving averages remain below the current level, lacking directional strength. Additionally, on the 4-hour chart, the risk skews to the downside, with XAU/USD struggling around a mildly bullish 20 SMA while the longer ones gain downward traction above it. Support levels are at 2,016.40, 2,001.60, and 1,988.60, while resistance levels are at 2,033.10, 2,040.30, and 2,052.70.
Additional Insight: The market is in a state of uncertainty as it awaits important data releases and central bank announcements. The fluctuations in Wall Street and the US Dollar are influencing the XAU/USD trading range. The upcoming monetary policy decision by the Bank of Canada is also adding to the uncertainty. Traders and investors will need to closely monitor these events to gauge the future direction of XAU/USD.
