Gold Price Sees Limited Upside Momentum Despite Three Week High

Gold's price (XAU/USD) is exhibiting limited upward momentum despite hovering at its highest level in three weeks, currently trading around the $1,937-38 range.

Arslan Butt•Wednesday, August 30, 2023•2 min read

Gold’s price (XAU/USD) is exhibiting limited upward momentum despite hovering at its highest level in three weeks, currently trading around the $1,937-38 range. Traders are seeking further indicators to solidify the dovish stance on the US Federal Reserve (Fed), which gained traction following disappointing US data the previous day.

The GOLD bulls face additional challenges from mixed concerns over US-China relations and sluggish performance in US Treasury bond yields.

A cautious sentiment prevails as investors await the release of US ADP Employment Change, the final Q2 Gross Domestic Product (GDP) readings, and the Personal Consumption Expenditure (PCE) data.

These impending releases contribute to the support for Gold’s multi-day high. Nevertheless, concerns have been raised about the Fed’s potential policy shift, especially after Fed Chair Jerome Powell emphasized the importance of data-dependency to uphold the current hawkish stance.

Furthermore, GOLD buyers find support from China’s pushback against US Commerce Secretary Gina Raimondo’s grievances about challenges faced by US companies operating in China. The International Monetary Fund (IMF) also expresses caution in allocating Special Drawing Rights (SDRs) due to the prevailing environment of higher interest rates and inflation.

Within this dynamic context, S&P 500 Futures are grappling to extend their three-day upward trend, while the US Dollar Index (DXY) remains relatively stable around 103.55 following its recent decline. Concurrently, US Treasury bond yields remain subdued at a two-week low.

In the days ahead, developments in US economic data and updates on US-China relations will significantly influence market direction, as the upward momentum for XAU/USD appears to be tapering off.

Technical Analysis of Gold Price

Despite a clear breakout above a monthly horizontal resistance, now acting as a support level, and the 200-day Simple Moving Average (SMA), Gold’s price struggles to maintain its upward trajectory due to overbought conditions signaled by the Relative Strength Index (RSI) (14).

Furthermore, the 50% Fibonacci retracement level of the July-August decline, located around $1,836, poses an additional challenge for the GOLD bulls.

In the event that GOLD Price sustains its position above the 200-day SMA and the aforementioned resistance-now-support area, disregarding the overbought RSI, the XAU/USD bulls could potentially target the 61.8% Fibonacci ratio at approximately $1,948.

However, an inclining resistance trend line from July 20, located near $1,958, will present an obstacle for GOLD buyers in the subsequent stages.

Conversely, a clear downward break below the key moving average and the corresponding support zone, situated around $1,933 and $1,932-30, respectively, might prompt a renewed interest from GOLD sellers.

Nevertheless, an ascending trend line originating from August 31, near $1,817 at present, could potentially challenge the XAU/USD bears before ceding control.

In summary, Gold’s price continues to be favored by bullish sentiment unless it breaches the support level at $1,817.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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Gold Price Sees Limited Upside Momentum Despite Three Week High

Gold's price (XAU/USD) is exhibiting limited upward momentum despite hovering at its highest level in three weeks, currently trading around the $1,937-38 range.

Technical Analysis of Gold Price

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Gold Price Sees Limited Upside Momentum Despite Three Week High

Gold's price (XAU/USD) is exhibiting limited upward momentum despite hovering at its highest level in three weeks, currently trading around the $1,937-38 range.

Technical Analysis of Gold Price

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