The gold price (XAU/USD) experienced a setback as it was rejected by the 200-day Simple Moving Average (SMA) at $1,930. The retreat followed Friday’s rally, which saw the spot price surge by over 3%.
Investors are eagerly anticipating Tuesday’s release of US Retail Sales figures for September, as it will provide insights into the future decisions of the Federal Reserve (Fed). Currently, the rise in US Treasury yields suggests that the market is anticipating another rate hike by the Fed in 2023. This hawkish sentiment poses challenges for the yellow metal, as it struggles to find demand. The 2, 5, and 10-year yields have all experienced notable increases, reaching 5.08% and 4.70% with gains exceeding 0.50%.
However, amidst these challenges, tensions in the Israel-Hamas conflict continue to escalate. This escalation may lead market participants to seek refuge in safe-haven assets like gold, providing a potential upside for the precious metal.
Taking a look at the daily chart, XAU/USD maintains a neutral to bullish outlook. Despite a slight decline, the Relative Strength Index (RSI) shifted into positive territory on Friday, and the Moving Average Convergence (MACD) histogram displays larger green bars. While the price faced rejection at the 200-day SMA, it managed to close above the 20 and 100-day Averages, indicating a favorable overall trend for buyers.
Key support levels for XAU/USD are located at $1,910, $1,900, and $1,880. On the upside, resistance levels lie at $1,930 (200-day SMA), $1,950, and $1,970.