- The XAU/USD pair advanced near $1,980, its highest level since June 2.
- US retail sales data for June came in below expectations.
- Lower yields allowed metals to advance.
On Tuesday, XAU/USD advanced towards $1,980 and posted gains of over 1%. In this sense, as retail sales point to a slowdown in the US economy, US Treasury yields fell in general, favoring the price of the yellow metal.
In reaction, US yields fall back, with the 2-year yield standing at 4.72%, while the 5- and 10-year yields fall to 3.97% and 3.77%, respectively, the latter leading a decline with declines of more than 1 %. With US yields being the opportunity cost of owning non-metal gains, their decline is putting traction on XAU/USD.
Attention now turns to next week’s Federal Reserve (Fed) decision, in which markets have almost priced in a 25 basis point (bp) rise. Due to weak inflation and retail sales, investors are refraining from betting on a further rise after July. Market participants will closely watch the Fed statement and Jerome Powell’s outlook for clues on future direction.
XAU/USD Levels to Watch
After consolidating above the 100-day SMA at $1,956, the outlook for XAU/USD is bullish in the short term. In addition, the RSI remains positively sloping above its midline. At the same time, the moving average convergence divergence (MACD) prints higher green bars, suggesting that the bulls are in command.
Resistance levels: $1,985, $2,000, $2,010.
Support levels: $1,956 (100-day SMA), $1,940, $1,930 (20-day SMA).
XAU/USD Daily Chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
