The price of gold (XAU/USD) has seen a resurgence despite the stability of the US Dollar (USD) in Tuesday’s trading. The upward movement of the yellow metal appears somewhat restrained as market participants exercise caution ahead of significant US inflation data anticipated later in the week. Recent sessions have witnessed a degree of downward pressure on XAU/USD due to the prevailing notion of sustained higher US interest rates. However, ongoing geopolitical tensions in the Middle East are fostering safe-haven demand, lending temporary support to gold prices.
This week, investors are turning their attention to pivotal US economic indicators. Scheduled for release on Tuesday is the US Producer Price Index (PPI) for April, coinciding with a speech from Federal Reserve Chair Jerome Powell. Wednesday will feature the unveiling of the US Consumer Price Index (CPI). These reports are poised to offer valuable insights into the Federal Reserve’s timing regarding potential interest rate adjustments. Should inflation data surpass expectations, it could diminish prospects for a Fed rate reduction, thereby placing downward pressure on the precious metal. Heightened interest rates have historically detracted from gold’s appeal as an investment, increasing the opportunity cost associated with holding the commodity.
Technical Analysis: Gold Price Maintains Positive Trajectory
The price of gold is ascending as it maintains a bullish stance. XAU/USD continues to trade above the critical 100-day Exponential Moving Average (EMA) on the four-hour chart, sustaining a positive momentum. Reinforcing this upward trend is the 14-day Relative Strength Index (RSI), presently situated in the bullish zone at 52.70, suggesting a greater likelihood of the support level holding firm rather than being breached.
An immediate resistance level for the precious metal is identified at the May 10 peak of $2,378. Further advances could lead to the psychological barrier at $2,400, followed by a potential rally towards an all-time high near $2,432, with an interim stop at the $2,500 mark.
Conversely, a crucial support zone is anticipated within the range of $2,325 to $2,340, marked by the convergence of the resistance-turned-support level and the 100-period EMA. A breach of this zone would expose the May 2 low of $2,281.