XAU/USD, commonly known as gold, has continued to trade close to the $3,250 level as markets fluctuate on conflicting signals. Investors are digesting today’s CPI release from the United States. At the same time, gold looks like it has little bullish potential over time. Another sign of a bearish sentiment Analysts are calling the shots as support levels remain strong, but resistance levels point to a bearish trading environment.
Judging by the most recent numbers from the CPI, inflationary pressures are starting to level out. Consumer prices increased by 0.2% in April. This uptick was marginally more than last month’s drop of -0.1%, but short of the anticipated increase of 0.3%. Year-over-year, this puts inflation at 2.3%, down slightly from March’s 2.4%. The less closely followed core annual reading, which strips out erratic food and energy costs, is still 2.8% mark.
Together, these numbers have introduced confusion and skepticism in the market. Because of this the Dow Jones Industrial Average is down over 0.40%. Even with this drop, the index is still up for the week, having added more than 1,000 points just on Monday.
The near-term support is at $3,225. That’s where the 200 Simple Moving Average (SMA) comes in to offer support at about $3,225.40. If prices were to drop beyond this level, an extra support plane can be found at $3,241.90 and afterwards at $3,212.85.
XAU/USD meets multiple resistance lines that traders need to watch out for. The initial resistance level is at $3,265.40, the next one is at $3,281.60 and the third level of resistance is at $3,305.65. The 20 SMA offers dynamic resistance near $3,316.70, suggesting any bullish attempts would have a hard time enacting any momentum.
Technical indicators for XAU/USD now settle in the static territory, indicating possible bearish extensions during the upcoming days. Under the surface the sentiment seems to be quite cautious as traders are keeping a close eye on economic indicators and market developments.