XAU/USD is trading close to $3,340 level. It remains in a consolidative holding pattern, stalling out for the most part during Thursday’s U.S. afternoon trading session. The pair encounters a strong resistance level at approximately $3,350, where sellers have repeatedly turned away advances. Even with this stagnation, the new economic data may offer new hints for the market players.
As things stand on the daily chart for XAU/USD, the pair is struggling a little under the 20 Simple Moving Average (SMA). This is a mildly bearish signal for the pair. While never a 100% accurate technical indicator, this one still implies that the short-term trend is still on the defensive. XAU/USD finds support near a bullish 100 SMA at approximately $3,313.40, indicating that buying interest emerges at these lower levels.
Over the last few trading sessions, technical indicators have shown no clear directional strength in XAU/USD. The pair has been seesawing up and down around midlines, showing a lack of decision from the traders. The 100 and 200 SMAs have converged, capping any bullish run for XAU/USD. Recently it has had a hard time overcoming resistance at $3,348.
Market analysts expect XAU/USD to breakout the $3,350 resistance level. A successful implementation of this move will change that sentiment from a bearish to a bullish one. Most analysts are looking for buyers to step back in on any XAU/USD pullbacks. They feel these times offer the best chance at great experiences for less money.
The most recent economic indicators further serve to underscore this key moment in the new market paradigm. Climate change money begins to flow The XAU/USD Composite PMI came in at 55.4, just a tick higher than last month’s 55.1. Adding to the positivity, the manufacturing index jumped to 53.3 from a prior print of 49.8, indicating a re-acceleration in business activity.
“US business activity grew at the fastest rate recorded so far this year in August, according to early ‘flash’ PMI data,” – S&P Global
The services output index for XAU/USD softened a little to 55.4, from 55.7 last month. This change represents a multifaceted success of industry sectors. Combined, these numbers could shape trader’s beliefs about gold’s safe-haven appeal in an increasingly volatile worldwide economy.
During her recent State of the Federal Reserve address, Fed Bank of Cleveland President Beth Hammack provided a view into the current monetary policy landscape. Monetary policy Mary Daly, president of the Federal Reserve Bank of San Francisco, noted that we are nearing a neutral policy rate. This suggests that the pace of interest rate increases could be tamer than assumed.
“There’s a small distance to get to a neutral policy rate,” – Fed Bank of Cleveland President Beth Hammack
Her remarks come in line with sentiments expressed by Fed’s Kansas City President Jeff Schmid. He made it clear that there’s “no rush to raise interest rates.” Schmid stressed that inflation is currently more like 3% than 2%. He underscored that there is additional work to be done on resetting monetary policy.
Traders are betting on gold’s technical setup. And so, like hawks, they await more guidance to ease from conflicting economic indicators and/or central bank communications—in this case, the guidance from Federal Reserve officials. According to the prevailing market sentiment, XAU/USD is expected to remain rangebound. If it continues this pattern, it will eventually move above the $3,350 resistance or fall back down to support near $3,313.40.