Gold price (XAU/USD) is trading in negative territory during the European session on Tuesday, eroding part of the previous day’s recovery gains from the $2,315-$2,314 area, marking over a three-week low. However, the downside appears cushioned by firming expectations that the Federal Reserve (Fed) will cut interest rates later this year, bolstered by disappointing US macroeconomic data on Monday. This expectation has dragged the US Dollar (USD) to a near two-month low, providing a tailwind for the non-yielding yellow metal.
Beyond the Fed’s potential rate cuts, persistent geopolitical risks are validating the near-term positive outlook for gold prices and supporting the prospects for further appreciation. Consequently, any subsequent decline in gold prices might be seen as a buying opportunity, with the decline likely remaining limited.
Traders might prefer to stay on the sidelines ahead of other significant US macroeconomic releases this week, including the Nonfarm Payrolls (NFP) report on Friday. Additionally, key central bank events, such as the Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday, could influence the XAU/USD and help determine its near-term trajectory.
TECHNICAL ANALYSIS: GOLD PRICE HOLDS ABOVE 50-DAY SMA SUPPORT NEAR $2,334
Gold price (XAU/USD) manages to hold above the pivotal support near the 50-day Simple Moving Average (SMA) at the $2,334 region during the European session on Tuesday.
Key Levels to Watch:
Immediate Resistance:
- $2,360: Friday’s swing high, likely to act as an initial hurdle.
- $2,364: A critical resistance level. A break above this could trigger fresh buying interest.
- $2,385: Intermediate hurdle on the way to the $2,400 mark.
- $2,400: Psychological resistance level.
- $2,425: Further momentum could extend to this zone.
- $2,450: All-time peak touched in May, a significant target for bullish traders.
Immediate Support:
- 50-day SMA ($2,334): Current support level.
- $2,325: Horizontal support zone ahead of the overnight swing low.
- $2,315-$2,314: Region providing additional support.
- $2,300: Psychological support level; a convincing break below could indicate deeper losses.
- $2,285-$2,284: Next relevant support zone.
Outlook:
From a technical perspective, gold is showing resilience above the 50-day SMA, indicating that buyers are still present at this level. The oscillators on the daily chart have started to gain negative traction, suggesting a cautious stance. A convincing break below the 50-day SMA could pave the way for deeper losses, with the price potentially weakening further below the $2,300 mark and testing support near the $2,285-$2,284 region.
Conversely, successful follow-through buying beyond the $2,364 level will be viewed as a bullish trigger. This could lift gold prices towards the $2,385 intermediate hurdle, with momentum potentially extending to the $2,400 mark and beyond, targeting $2,425 and the all-time peak of $2,450.
