The Gold Spot Price (XAUUSD) has stalled its bullish momentum following the return of risk appetite within the global market.

The banking sector crisis is approaching the close of its first dramatic chapter, following the rescue operations implemented by the Federal Reserve and European Central Bank, along with the acquisitions of failing banks.

Traders will be glued to this week’s PCE Index, the Federal Reserve’s preferred inflation gauge, to determine whether inflation is a sticking point and how it will likely affect sentiment.

Technical

The XAUUSD has traded upwards, well above its 100-day moving average, forming a support and resistance at the 1938.99 and 1997.63 levels, respectively. Price action formed an upward-sloping trendline, with the price moving above the 100-day moving average.

Following a retracement towards support, price bounced off the 1938.99 level as bullish momentum peaked. If bullish traders commit to their purpose, the spot price will likely move higher towards resistance.

Alternatively, if the high spot price piques the interest of bearish traders looking to sell high, price action will likely move lower, with the 1938.99 level earmarked as a probable level of interest.

Summary

With the PCE Index due on Friday, stable to higher inflation could drive risk-off momentum within the market. A higher inflation reading could benefit the U.S. Dollar at the expense of Gold as expectations of further rate hikes prevail. Capital flows towards the higher-yielding U.S. denomination safe-haven assets, such as the greenback and U.S. Treasury bonds will likely leave the XAUUSD with higher downside possibilities.

Sources: Reuters, TradingView