The price of gold (XAU/USD) has struggled to maintain its recent gains, facing its first daily losses in six days as it hovers near a one-week low. Market participants are closely monitoring economic data from the United States (US) and signals from the Federal Reserve (Fed) to determine the future direction of the precious metal.
Traders of XAU/USD are reevaluating their earlier bearish sentiment regarding gold, considering the latest US economic data and Fed indications. There is a prevailing hope that the US economy can achieve a “soft landing” even amid rising interest rates. However, concerns about a potential economic slowdown in other major countries have contributed to the strength of the US Dollar, which, in turn, has exerted downward pressure on gold prices.
Additional challenges for XAU/USD include apprehensions about China’s economic outlook. China, one of the world’s largest consumers of gold, is grappling with economic uncertainties amid ongoing tensions between the United States and China, as well as rising bond yields.
Amid this backdrop, the one-week blackout period for European Central Bank (ECB) policymakers has added an element of uncertainty to the market. Furthermore, investors are eagerly awaiting second-tier US employment data, which may provide further insight into the Fed’s future policy decisions.
Key Levels to Monitor for Gold Price
Analysis using the Technical Confluence indicator suggests that the gold price is currently testing the lower end of its short-term trading range, signaling a potential shift away from the recent bearish trend that lasted for five days. Despite recent declines, XAU/USD remains within a robust trading range, with support at $1,915 and resistance at $1,935.
Specifically, the middle band of the one-day Bollinger indicator aligns with the Fibonacci 38.2% retracement level on the one-month chart, highlighting $1,915 as a critical support level.
Conversely, the Fibonacci 61.8% retracement level on the one-month chart serves as a notable resistance point at $1,935.
Additional technical indicators include the middle band of the four-hour Bollinger chart, which converges with the 50-day moving average (DMA) to form a support zone in the range of $1,930-31.
Moreover, the 200-day DMA, combined with the Pivot Point one-week Support 1 and the Fibonacci 23.6% retracement level on the one-day chart, suggests an immediate support level at $1,918.
Further analysis reveals that the Fibonacci 38.2% retracement level on the one-week chart, as well as the 161.8% extension level on the one-day chart, act as resistance barriers near $1,938 before guiding gold buyers towards the $1,950 threshold.
For sellers, the Fibonacci 23.6% retracement level on the one-month chart initially poses a challenge at $1,905, redirecting them towards the Pivot Point one-week Support 2 and the one-month Support 1 at approximately $1,895.
