Gold prices, specifically the XAU/USD pair, have shown resilience in recent trading sessions, maintaining levels above $2,880. The pair is navigating above bullish 100 and 200 Simple Moving Averages (SMAs), with technical indicators revealing signs of upward momentum, though their strength remains uneven. The 20 SMA offers dynamic resistance close to the $2,899.50 mark, while buyers have been seen rallying around a bullish 200 SMA. The current market conditions see gold trading at approximately $2,885, a move largely attributed to the weakening of the US Dollar (USD).
The USD's decline follows the release of the US official ISM Manufacturing PMI data, which fell to 50.3 in February from January's 50.9. This data reflects a slowdown in manufacturing growth, prompting a retreat in US yields. The impact of this economic report has contributed to the USD's slide, creating an environment where gold can thrive. As a safe-haven asset, gold has continued to distance itself from a multi-week low near $2,830 that was recorded on Friday.
In the broader context, the uncertainty surrounding the Trump administration's trade policies adds another layer of complexity to gold trading. The impending US tariffs of 25% on Mexico and Canada, along with an additional 10% on China, are set to be implemented on Tuesday. These tariffs contribute to market unease, prompting investors to seek refuge in gold, thereby supporting the XAU/USD pair.
From a technical perspective, the 4-hour chart indicates a skew towards upward potential for gold; however, further confirmations are necessary to predict a significant recovery towards previous record highs. On the daily chart, the ongoing recovery is evident but insufficient for a full-fledged rally to historic peaks. Resistance is encountered at a flat 100 SMA near $2,910, while support levels are established at $2,876.90, $2,858.70, and $2,845.40.
The strategic positioning of these SMAs and support levels plays a crucial role in determining the short-term trajectory of gold prices. The bullish alignment of the 100 and 200 SMAs suggests underlying strength in the market, bolstered by increased buying activity around the 200 SMA. However, overcoming the dynamic resistance posed by the 20 SMA at around $2,899.50 remains a challenge.
Despite these hurdles, gold's current trading level above $2,880 is indicative of its ability to capitalize on USD weakness. Investors continue to monitor developments in US trade policy and economic data releases closely, as they are pivotal in shaping gold's performance in the coming days.