- Gold gains positive traction for the second day in a row on Monday.
- The optimistic expectations of the Fed and the renewed strength of the USD limit the rise of the XAU / USD.
- Investors also seem reluctant ahead of the key central bank meeting.
The oro it has built on Friday’s good bounce from the $ 1,770 area and has gained some traction on the first day of a new week. The US headline CPI accelerated to the highest level since 1982 and acted as a tailwind for the precious metal., which is a proven long-term hedge against rising prices. However, a combination of factors has limited any further gains for the XAU / USD.
The markets seem convinced the Fed will tighten its monetary policy at a faster pace to contain stubbornly high inflation. This, in turn, continued to prop up the US dollar and limited the rise in dollar-denominated gold prices. Apart of this, prevailing risk appetite prevented investors from opening aggressive bullish positions around safe-haven gold. Investors also seemed reluctant to open aggressive positions and rather preferred to wait on the sidelines before this week’s key central bank event.
This The Fed is expected to announce its policy decision on Wednesday and is expected to accelerate the pace of reduction in bond purchases., setting the stage for an interest rate hike earlier than expected. The European Central Bank (ECB), the Bank of England and the Bank of Japan they will also dictate their political decisions later in the week. The result will play a key role in determining the next phase of a directional movement for gold prices.
However, gold has managed to stay in positive territory for the second day in a row and remains at the mercy of broader market risk sentiment and dollar price dynamics. That said, it will remain prudent to wait for a strong continuation buy before positioning for any further bullish movement amid the absence of market-relevant economic releases.
Gold Technical Outlook
Even from a technical perspective, the bulls are likely to wait for a sustained move past the technically significant 200-day SMA before opening new positions. The mentioned barrier, around the region of 1.793-95$, coincides with the 100-day SMA and should act as a crucial point for investors. A convincing breakout has the potential to push gold prices past the level of 1.800$, towards the test of the next relevant resistance near the 1.810-15$. Momentum could extend into the strong horizontal barrier of 1.832-34$.
On the other hand, the area of 1.775-74$, followed by the level of 1.770$ must defend the immediate fall. This is followed by the monthly low, around the region of 1.762$, which if broken will set the stage for a fall towards the support zone of 1.750-48$. The bears could eventually try to challenge the support zone of 1.725$ before dragging the XAU / USD towards the round level of 1.700$.
Daily chart gold
Gold key levels
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