Gold prices have been on the rise again this week, with XAU/USD approaching the $2,930 mark during the American session on Tuesday. The precious metal resumed its upward trajectory after briefly dipping to $2,876.93 on Friday, marking a second consecutive day of gains and bringing it close to the record high of $2,942.76 set earlier this month.
The US Dollar (USD) has softened amid improved market sentiment, fueled by hopes of a resolution to the ongoing Russia-Ukraine conflict. In a significant diplomatic move, US and Russian delegations met in Riyadh for peace talks, although Ukraine was not represented. Despite the absence of Ukrainian leadership at the talks, both Russian and US diplomats have called the meeting a positive step forward.
In other economic news, Canada’s Consumer Price Index (CPI) for January rose by 1.9% year-on-year, slightly higher than the 1.8% increase recorded in December, and matching analysts’ expectations. Monthly prices rose by 0.1%, compared to the -0.4% drop in December. These optimistic figures helped bolster the market mood, contributing to the overall positive outlook.
XAU/USD Technical Outlook: Bullish Momentum Continues
From a technical perspective, the daily chart for XAU/USD reveals that buyers are regaining control, with technical indicators resuming their upward movement after correcting previous overbought conditions. The price is currently above all bullish moving averages, signaling a strong upward trend. Notably, the 20-day Simple Moving Average (SMA) remains firmly bullish, well above the 100 and 200 SMAs, which are also moving northward.
In the near term, the 4-hour chart suggests that XAU/USD has room to continue its advance. The pair has recovered above a flat 20 SMA, which now provides support at around $2,909.60. The 100 and 200 SMAs are accelerating to the north, reflecting the strength of the buyer’s momentum. Additionally, technical indicators have regained upward momentum, although the Momentum indicator is still below its neutral 100 line, indicating some caution.
With the market mood improving and technical indicators aligning with bullish sentiment, gold prices are poised to challenge the recent record highs. If the current trend persists, we could see XAU/USD pushing past the $2,950 level and possibly approaching new all-time highs. However, traders should continue monitoring any developments in the Russia-Ukraine situation and broader economic data, which could influence gold’s price movement in the near term.
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