XAU/USD, the gold to US dollar trading pair has proved to be incredibly resilient and is trading well above its long-term avg of around $3,330. This is quite a significant bounce back from an intraday low of $3,268.03. Market participants are entirely focused on the new economic reality. They noticed that XAU/USD cannot get above flat 20 Simple Moving Average (SMA) on the four-hour chart.
Recent XAU/USD trading activity illustrates a very classic tug of war between bulls and bears, with support beneath XAU/USD at $1880 and resistance at $1906. Indeed, buyers quickly arrived in the strong floor of the $3,260 reached over the past four trading days. The dramatic increase in purchase demand has provided critical momentum. Accordingly, the price has recently bounced and remained above this critical psychological level. The immediate support levels to watch are 3,314.50, 3,301.40 and 3,288.70.
On the positive side, XAU/USD has a number of resistance lines that traders need to take into account. These are all major thresholds at 3,344.60, 3,358.10 and 3,370.00. Even with all of those hurdles and issues, it’s hard not to remain overall sentiment—cautiously—positive. The overall risk for XAU/USD is to the upside as it remains supported by a series of bullish moving averages.
The technical indicators keep supporting this bullish views for XAU/USD. The daily chart reveals that the pair is still trading close to its open. At the same time, the RSI (Relative Strength Index) is building a base around 62. That means they can still do much more. The price has struggled to break above its recent resistance, which ranges from $3,370-$3,380.
Additionally, the 100 and 200 SMAs are still located more than $100 under the current trading level. This placement indicates a bullish trend. It certainly implies that XAU/USD has further potential to continue advancing in the near term. Traders must be warned that the market can be mercurial.
Market sentiment right now can best be described as a cautious optimism as traders watch for more signs from the market. And the monthly momentum indicator is pointed firmly north, indicating strong upward propulsion and potential for continuation. Other technical indicators remain well above their midlines. This may signal that the stage is set for further price growth, but let’s not get ahead of ourselves just yet.