XAU/USD, the gold price benchmark, has recently shown remarkable bullish energy. It had indeed broken the $3,300 resistance and shot up, achieving an intraday high of $3,328.94 in the middle of the American trading session. This impressive movement takes place amidst a very clear trend of weakness in the USD. Compounding everything is the emergence of positive economic data from the United States. The recent price spike indicates that the bullish forces have taken strong control over the market. This critical control suggests that there is room for further improvement in future sessions.
Gold prices have rallied from a bullish 20 Simple Moving Average (SMA) which offered strong support at $3,253.45. This rebound further emphasizes the power of this upward trend, with XAU/USD now trading well above all its moving averages. The 100 and 200 SMAs continue to have their bullish slopes in place, remaining far under the tighter 20 SMA. This adds to the tide of generally positive news washing over the market.
The technical indicators for XAU/USD have likewise painted a worthwhile, bullish picture. They have ricocheted off or above their midlines and are now picking up momentum from within strongly favorable territory. Additionally, the indicators on the 4-hour chart have flattened out near their intraday highs. Further, they are all still well above their respective midlines, showing continued upward momentum.
While these moves in gold prices have been swift, XAU/USD has still managed to close at higher week-highs. Underneath, the first three support levels for the precious metal are established at $3,290.10, $3,273.15 and $3,258.60. Resistance levels are $3,329.90, $3,352.80, and $3,370.55. These four points broadly establish a framework for understanding and predicting where prices might be heading in the short term.
Equally responsible for the recent spike in gold prices is a slew of negative economic indicators coming out of the United States. As a result, the ISM Services PMI for April blew away estimates, coming in at 51.6. The broader impact of this positive surprise has altered market dynamics and contributed to the bullish XAU/USD strength experienced lately. Furthermore, comments from US Treasury Secretary regarding potential trade deals with various nations this week have added to market speculation, potentially impacting gold prices further.
In other news, Treasury Secretary Steve Mnuchin proclaimed that real progress could be achieved on trade talks with China. That is likely to happen in the next few weeks. Such developments may create additional volatility in the financial markets and influence gold prices as investors react to changing economic conditions and trade relations.