XAU/USD, the trading pair for gold quoted in US dollars, is currently experiencing a breakout bullish trend. As of writing, it’s trading just under $3,370. Additionally, the price is still holding far above the 20 Simple Moving Average (SMA), located around $3,293.30. This strengthening US dollar selling is a new development fueling this powerful move higher. This selling comes on the heels of disappointing economic data from the U.S. Currently, XAU/USD is seeking break north of the psychological barrier at $3,400.
According to the momentum indicator, XAU/USD continues to hold a strong footing above its midline marking the ongoing bullish sentiment. The Relative Strength Index (RSI) for XAU/USD currently resides at the 57 mark. That’s a good sign of a healthy market, and there’s room for further northward movement without entering into an overbought condition. XAU/USD is still trading clear above the 100 and 200 SMAs. These two moving averages are widely considered long-term trend detectors.
As traders monitor the dynamics in play, XAU/USD continues to pressure weekly highs, with a recent peak recorded at $3,392.22. The latest bounce from the mildly bullish 20 SMA provides solid intraday support. More generally, this movement contributes to a generally optimistic medium-term outlook. Observers note that this bullish SMA is effectively advancing beyond flatter 100 and 200 SMAs, which could signal a shift in market dynamics toward a more sustained bullish phase.
The short-term outlook for XAU/USD remains positive. Also noteworthy is the 4-hour chart, which shows a bullish continuation pattern forming, suggesting further upward extension, with positive momentum likely to carry over into early next week. The daily chart doesn’t lie, as XAU/USD continues to prove that it’s in consolidation of its latest bullish moves. This foreshadows a time of stabilization, but is eventually followed by another uptick.
The recent weakness in the US dollar has played a major role in XAU/USD’s current strength. Traders are taking the bait on reports where the economic data has disappointed. This has caused the international community to reconsider the strength of the dollar, and turn to gold as an inflation hedging, safe-haven asset. Such a scenario would certainly expand the bullish bias around XAU/USD at this juncture.
Technical analysts see a bullish future for XAU/USD. This optimism comes largely from its impressive track record against major technical indicators. XAU/USD continues to hold strong, reclaiming key support areas such as the 20 SMA, which have helped plummet prices significantly. This fundamental strength increases its potential for bullish breakout as it approaches key resistance levels.