XAU/USD analysis shows a continued upward trend, marking the fifth positive day out of six, as the pair climbs above $2,430 during the early European session on Tuesday. However, the precious metal faces resistance due to some US Dollar (USD) buying and a prevailing risk-on environment, capping its gains.
1. Recent XAU/USD Analysis Movements
The near-term outlook favors bullish traders, driven by growing acceptance that the Federal Reserve (Fed) might cut interest rates in September. Fed Chair Jerome Powell’s recent comments have kept US Treasury bond yields low, supporting a positive outlook for XAU/USD. Traders are now eyeing the US monthly Retail Sales data for further direction.
2. Market Influences on XAU/USD
Fed Chair Jerome Powell indicated that recent inflation data boosts confidence that price increases are stabilizing. Last week, the US Labor Department reported a dip in headline CPI for the first time in over four years, with the yearly rate falling to 3% in June from 3.3% in May. Powell suggested that the Fed might not wait until inflation hits 2% before cutting rates, lending support to XAU/USD. Market pricing suggests a strong likelihood of a rate cut in September and possibly another by year-end.
3. US Dollar and Risk-On Environment
The US Dollar has gained traction, moving away from a three-month low, potentially limiting further gains for XAU/USD. Additionally, a risk-on rally in global equity markets could restrain the safe-haven appeal of XAU/USD ahead of the US Retail Sales data. Consensus estimates suggest that headline sales will remain flat in May, with sales excluding automobiles expected to rise by 0.1%.
4. Technical Analysis of XAU/USD
From a technical perspective, last week’s breakout above the $2,390-$2,388 supply zone and sustained strength above $2,400 favor bullish traders. Daily chart oscillators remain positive and are not overbought, indicating potential for further upside towards the all-time peak near $2,450. Sustained buying could trigger an extension of the recent uptrend seen over the past three weeks.
5. Potential Downside Risks for XAU/USD
On the downside, any decline below $2,400 may present a buying opportunity, with support located around the $2,390-$2,388 resistance level. Additional selling pressure could push XAU/USD down to the $2,358 area, while intermediate support lies between $2,372 and $2,371. A further drop could reveal the 50-day Simple Moving Average (SMA) support near $2,350.
Conclusion
XAU/USD remains on a positive trajectory, but faces limitations due to a stronger USD and risk-on sentiment. Traders should watch upcoming US Retail Sales data for fresh impetus. For more detailed daily gold updates, visit Daily Gold Signal and the Daily Gold Update category.
