XAU/USD, the popular gold trading pair, finds itself well-supported above the 20-, 50- and 200-day moving averages. This position previews an excitingly bullish period for investors. Gold is now trading around $4,460. Notably, it has displayed amazing strength by never closing below its 20-period Simple Moving Average (SMA) along with other key support levels. This development is a symptom of a consolidative phase while market participants look for the next big catalyst that might drive direction in price action.
XAU/USD trades above all its main moving averages with the strength of this bullish trend underlining the bullish market mood. The 20-period SMA is currently providing immediate support at $4,436.38. It provides a break from any temporary market volatility. At the same time, the 100- and 200-period SMAs have been broken through, which is further confirmation of continued bullish strength in the market.
The daily chart above shows that the 20-day SMA has just formed an upward staircase. It remains nicely above the bigger picture 100- and 200-day SMAs. This bullish positioning could reflect that gold has been very resilient at current price levels. It further suggests that gold may be on the verge of making bigger moves in the near future. The dynamic support represented by the 20-day SMA at $4,370.98 provides an additional confluence of stability for traders.
XAU/USD seemed to adopt a softer tone on Wednesday. The short-term momentum gauge points to minor weakening yet is still holding above its midline, a bullish signal that broader strength continues. The Relative Strength Index (RSI) for XAU/USD is at 62 and bullish momentum is strong. This is pictured as loss of upward pressure but still demonstrates that the market is far from overbought.
Looking ahead, market analysts at FXStreet expect XAU/USD to extend its consolidative phase. Investors should be on the lookout for major economic data releases or geopolitical developments that can cause sharp price movements. With traders eagerly waiting to watch these developments, the technical indicators paint a picture of cautious optimism, boding well for gold prices.