The US Dollar index was one of the biggest movers right after Wall Street opened, this really put pressure on the gold market today. Consequently, XAU/USD, which indicates the value of gold in USD terms, crashed to $3,005.87. The decline is mostly due to the continued strengthening of the USD, which keeps its overall broad short-term bullish posture. The XAU/USD as of this writing sits a couple dozen dollars above its intraday lows, today approaching the psychologically important $3,000 mark. According to market analysts, the gold price might break through this important resistance level in the next few sessions.
The effects of the flooding USD have turned all kinds of technical indicators into fodder for bewilderment and debate. The 100 and 200 Simple Moving Averages (SMAs) are both bullishly sloped here. Today, they are still sitting over $60 in the money at current trading levels. The 20 SMA, hovering at nearly 3,030, is slightly bearish. All eight indicators are building downward momentum, even within the negative territory, which is indicative of possible continued decreases. The 20 SMA provides dynamic support just below current levels at $2,949.20. At the same time, the longer-term 100 and 200 SMAs are rising, remaining well below the shorter SMA.
The lack of recent precedent of success in the US economy adds to this financial foreboding. All economic data released by the US so far have been largely encouraging, with the index of national business activity growth accelerating sharply in March. That economic strength helps strengthen the US Dollar. As a result, gold prices are under pressure as the yellow metal moves toward the $3,000 per troy ounce level. Market participants are watching all of this with bated breath as they look forward to more movement from the data that could shift market dynamics.
Importantly, all eyes will be on this Friday’s release of the February Personal Consumption Expenditures (PCE) Price Index figures. This new data will provide unique insights into where and how consumers are spending their money all across the US. It would change the trajectory of the USD—and by extension, gold prices.
Amidst this fresh downward trend, market observers continue to keep an eye out for possible recoveries in gold prices. The XAU/USD is inching toward key support lines. That said, marked changes in macroeconomic metrics or USD trajectory would trigger U-turns.