XAU/USD, the trading symbol for gold against the US dollar has shown remarkable stay power over the last week of trade. It’s now oscillating in-between important Fibonacci support and resistance levels. After a recent low of about $3,319.75 earlier today, the markets have recovered somewhat. Positive reversal that has helped XAU/USD to bounce back and trade closer to the $3,350 level – home to the majority of market experts’ bullish comfort range.
These recent movements in XAU/USD can be explained by multiple macroeconomic factors. The change in the price of gold fluctuated a lot, going from $3,452.51 to $3,247.83, a drop of extreme proportions. It has since come back, bouncing off of about the 38.2% Fibonacci retracement of this drop. As it stands now, XAU/USD looks to be retesting the upper Fibonacci channel at the 61.8% retracement level, which is located at $3,374.56.
Technical analysis shows that XAU/USD is now holding above a slightly bearish 20 Simple Moving Average (SMA). The 100 and 200 SMAs are both trending decidedly to the upside. This trend supports our view of a long-term bullish outlook for the gold market. All of these indicators point to a most likely build up of stronger long-term upwards momentum, even in the face of short term fluctuation, in the gold market.
Spot Gold was under heavy pressure. Prices crashed down to $3,319.75 at one point. Following that sell off, XAU/USD recovered sharply, nearing $3,350 at publication. This movement is indicative of a market correction and is a strong indication of a coming consolidation phase. According to analysts, the most important support levels for XAU/USD are currently at $3,325.00, $3,311.70, and $3,295.50. On the flip side, resistance levels are at $3,350.18, $3,374.56 and $3,390.10.
Recent economic data has been at the forefront of moving gold prices. June US Producer Price Index (PPI) data came in stronger than expected, bolstering sentiment across markets and benefitting XAU/USD as a result. On an annual basis, the PPI increased by 2.3% in June. This was a drop from the earlier 2.6% rate and below the expected 2.5%. The year-over-year advance for the core annual reading of PPI was 2.6%. This is a drop from 3% in May and below the forecast of 2.7%. Positive economic figures typically make for a tough gold price forecast. That’s because they feed all the way through to affecting inflation expectations and interest rates.
Federal Reserve Chairman Jerome Powell’s term is up in May 2026. Very much out there remains how this timing will affect future interest rates and inflation goals within the broader framework of monetary coverage. We’re just beginning to find out what implications changes in leadership at U.S.D.A. might have on market dynamics. This move could further affect investor sentiment towards gold as a safe haven asset.