The price of gold (XAU/USD) has remained stable, reaching its highest level in four weeks as it enjoys a four-day winning streak. Market participants are eagerly awaiting crucial inflation indicators from the US and Eurozone, which will provide key insights into the future of the gold market. The downbeat US economic data has sparked concerns about the Federal Reserve’s policy shift, leading to a boost in the XAU/USD price. Additionally, investors are optimistic about the possibility of increased stimulus from China, a significant consumer of gold. However, mixed activity data from China and cautious sentiment ahead of the upcoming data releases have left gold buyers on edge.
Looking ahead, the Eurozone Consumer Price Index (CPI) and Harmonized Index of Consumer Prices (HICP) for August will serve as important risk catalysts for the XAU/USD traders. However, the focal point will be the US Core Personal Consumption Expenditure (PCE) Price Index for August. It is anticipated that this index will remain unchanged at 0.2% MoM but rise slightly to 4.2% YoY from the previous reading of 4.1%. A decrease in the US inflation gauge will prompt gold buyers to seek confirmation from the Nonfarm Payrolls (NFP) data, which can potentially signal an end to the Fed’s hawkish stance and consequently drive up the XAU/USD price.
Key Levels to Monitor for Gold Price
Our Technical Confluence indicator reveals that the Gold Price is comfortably above the $1,935–36 support confluence, indicating a potential for further upward movement. The aforementioned support level includes the Pivot Point one-day S1 and the Fibonacci 61.8% level on a one-month timeframe.
An additional factor curbing the short-term decline of XAU/USD is the $1,930 level, which encompasses the 50-day moving average (DMA) and Pivot Point one-week R1.
Subsequently, the confluence of the Fibonacci 161.8% level on a one-day basis and the Pivot Point one-day S2 both highlight $1,925 as a crucial support level for gold buyers.
On the other hand, the upper limit of the Bollinger Bands on the daily chart and the Pivot Point one-day R1 serve as resistances, limiting the immediate upward movement of the Gold Price near $1,950.
Of greater significance, the 100-DMA and Pivot Point one-day R2, located around $1,957–58, pose a formidable challenge for XAU/USD bulls before a potential surge towards the Fibonacci 23.6% level on a one-month timeframe at approximately $1,970.
In conclusion, there are relatively few obstacles to the upward trajectory of the Gold Price. However, the release of US inflation data has the potential to test the strength of the bulls in the gold market.