Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Gold Spots (XAUUSD) maintained their position above the $1,930 per ounce mark on Tuesday, marking a two-week high, as investors turn their attention to upcoming central bank meetings. The US Federal Reserve’s decision, expected to keep rates unchanged, holds the spotlight as markets await insights into its stance on inflation and future policies.
The US dollar’s recent retreat from six-month highs bolsters gold’s appeal, especially ahead of key central bank announcements by the US, UK, and Japan this week. While the Fed is unlikely to alter rates, its outlook on future rates remains critical.
Low global inventories of gasoline and diesel pose short-term inflation risks. However, gold’s appeal may diminish if the Fed raises rates further to control inflation. Gold bulls may face challenges until market confidence grows in the Fed’s willingness to ease financial conditions.
On the 4-hour chart, the price of gold stands at $1,933.98/ounce, trading above the daily pivot point. Notably, price action is currently positioned above the 20-EMA (blue line), the 50-EMA (red line), and the 100-EMA (orange line). The 20-EMA has recently crossed above both the 50-EMA and the 100-EMA, indicating a bullish trend. The Relative Strength Index (RSI) stands at 64.69, with the RSI-based Moving Average at 61.61, suggesting a market in an uptrend.
Potential short-term trading opportunities could emerge if the price action maintains its momentum, targeting the $1,938.65/ounce resistance level. A successful breakout could bring the $1,948.77/ounce resistance level into play in the short term.
However, a push below the daily pivot point may offer short-term trading opportunities toward the EMAs and the initial support at $1,922.47/ounce. A break below this initial support, on significant volume, would leave the $1,913.76/ounce and $1,901.08 /ounce support levels within reach in the short term.
As we move forward, the Fed’s interest rate decision, due later in the week, will play a pivotal role in shaping market sentiment and the non-yielding bullion’s trajectory. With the technicals suggesting a short-term bullish sentiment toward gold, a potential upside towards the $1,938.65/ounce and $1,948.77/ounce resistance levels remain.
However, a break below the $1,928.95/ounce level would leave the $1,922.47/ounce and $1,913.47/ounce support levels within the bears’ reach in the short term.
Fuentes: TradingView, Trading Economics, Reuters, Dow Jones Newswire.