Gold prices reached new heights on Tuesday, with Spot Gold peaking at $2,942.76 before experiencing a slight pullback. Despite this drop to around $2,880 early in the U.S. trading session, the precious metal quickly regained its footing and remained above the $2,900 mark as the day progressed.
The U.S. Dollar (USD) lost ground against other major currencies, contributing to gold’s strength. This shift followed a cautious tone in the market, especially ahead of U.S. Federal Reserve Chairman Jerome Powell’s testimony before Congress. Despite the market’s initial uncertainty, Powell’s comments, which echoed his earlier statements following the January Federal Reserve meeting, helped ease concerns. He reiterated that the Fed was in no rush to adjust its monetary policy and wanted to make further progress on inflation, adding that the economy was in a “pretty good place.” Powell also declined to address questions on tariffs, which provided some relief to financial markets and contributed to the USD’s weakness.
Powell is set to testify again on Wednesday before a different commission. Additionally, the U.S. is expected to release the January Consumer Price Index (CPI), which is forecasted to show a 2.9% year-over-year increase, matching December’s reading. The core CPI is anticipated to rise by 3.1%, slightly lower than the previous 3.2%.
XAU/USD Short-Term Technical Outlook
From a technical standpoint, XAU/USD remains bullish, although overbought conditions suggest a potential correction in the near term. On the daily chart, technical indicators have modestly retreated but remain in extreme levels, while gold continues to trade well above its moving averages. The 20 Simple Moving Average (SMA) is trending higher, currently situated around $2,787.34, far below the current price, indicating the strength of the uptrend.
On the 4-hour chart, XAU/USD buyers added to their positions during an intraday dip, finding support at the bullish 20 SMA around $2,883.50. The 100 and 200 SMAs continue their strong upward slopes well below the current price, reinforcing the bullish trend. Technical indicators have corrected from extreme overbought conditions but are holding steady above their midlines, signaling continued buying interest during price retracements.
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