Traders across Asia and Europe exercised caution on Tuesday ahead of Federal Reserve Chairman Jerome Powell's testimony before Congress. Despite this cautious sentiment, Bitcoin made significant strides, extending its recovery by trading above $98,000—a 1% increase from the previous day. Meanwhile, the US Dollar saw a decline in its recent appeal on the foreign exchange board, even as market participants remained wary throughout the day.
In the precious metals market, XAU/USD corrected its overbought conditions in the near term, presenting opportunities to resume its upward trajectory. Buyers appear to have been attracted to dips, maintaining higher highs as a possibility. The US is set to release its January Consumer Price Index (CPI), which is anticipated to remain stable at 2.9% year-over-year, echoing December's reading.
Powell's testimony reiterated much of what was communicated during the January Federal Reserve monetary policy meeting. He emphasized that policymakers are not in a rush to adjust the current monetary policies and expressed a desire to see more progress on inflation. The core annual advance is expected at 3.1%, a slight decline from the previous 3.2%.
The 4-hour chart for XAU/USD indicates that buyers seized intraday dips towards a bullish 20 Simple Moving Average (SMA), which now offers dynamic support at approximately $2,883.50. Additionally, resistance levels for XAU/USD stand firm at $2,911.60, $2,925.00, and $2,940.00. The 100 and 200 SMAs maintain robust upward slopes, lying well below the shorter moving averages.
Despite these movements, it's crucial to note that neither the author nor FXStreet are registered investment advisors, and nothing in this article should be construed as investment advice. The bright metal remains comfortably above all its moving averages, with the 20 SMA rising steadily but currently positioned at around $2,787.34—significantly below the present level to hold immediate relevance.