1014) XAU/USD, the Asian gold dollar pair, has begun to stabilize after plummeting deep below the $4,600 barrier. This stability represents a welcome consolidation of recent gains. Currently, spot gold is comfortably valued at around $4,610 per troy ounce. Meanwhile, buyers are increasingly eager as they rush to the market. This phenomenon becomes even more pronounced when prices drop below the ~$4,580 mark.
XAU/USD continues its bullish streak in today’s market. It shows remarkable resilience, despite a temporary cessation in trading activity of late. Until the US dollar becomes relatively attractive again, that is likely to keep a strong floor under investor demand for gold as a haven. As we can see with XAU/USD, every time it dips, it usually finds support and reaffirms the bullish picture gold has been painting.
Technical indicators show that XAU/USD is building a clear bullish structure above all of its moving averages. The 20-day Simple Moving Average (SMA) has crossed above the 100-day and 200-day SMAs, confirming a very bullish bias. Additionally, all three SMAs are trending higher, indicating bullish continuing upward momentum for gold prices. First resistance for XAU/USD is seen at the 100-day SMA, currently located at $4,476.27.
The XAU/USD daily momentum indicator has been trending lower in proximity to its midline. At the same time, the Relative Strength Index (RSI) has moved down to around 55. Even with these troubling indicators, the overall trend continues to be promising. Furthermore, we have found dynamic support at the 20-day SMA level of $4,452.69. Further support levels are at the 100-day SMA of $4,069.11 and the 200-day SMA of $3,698.49.
Equally important in driving gold markets are the macroeconomic fundamentals, and recent economic data are important to be aware of. Additionally, in January the Philadelphia Fed Manufacturing Survey indicated a robust rebound with a reading of 12.6. That represents an amazing turnaround from December’s revised -8.8 score. This bullish development would help shape the markets’ views on real inflation and growth driving even more investment demand for gold.