Buying the Dip in Gold Price Again, on High XAU Physical Demand

The Gold price has been making lower highs this week, but a support zone has formed above $2,150, where we we have bought XAU several times. Today we are seeing another dip to this level during the US session, but the decline is stalling above this area once again, so we decided to open a buy Gold signal.

Gold H4 Chart – Will the 200 SMA Hold As Support?

Gold Technical Analysis

GOLD attempted to reach $2,200 last week, but it failed and XAU/USD has been making lower highs, which seems like a retreat, leading to a potential weekly drop of around 0.4%, which marks the first such decrease since in a month. This pullback comes after gold retreated from last week’s record high of $2,195.22 which it reached last Friday.

The downward pressure on Gold prices follows the release of data indicating that consumer prices CPI in the United States rose above expectations in February, suggesting inflationary pressures, which has lowered the odds of FED rate cuts for 2024. Additionally, producer prices PPI also showed signs of strength yesterday, contributing to the downward pressure on Gold, despite weaker retail sales.

Gold futures for April were trading at $2,1973 per troy ounce earlier today, hitting the take profit of our buy Gold signals which we opened yesterday. But the 100 SMA (green) stopped the upside momentum and the XAU price reversed lower. However, the 200 SMA (purple) is holding as support on the H1 chart, so we decided to open another Gold trade on the long side at the support zone.

Global Gold Demand Remains High

ANZ observes that despite increases in Gold prices, there has been an unexpected resilience in physical gold demand, with stable global consumption levels attributed largely to significant interest from China and India. The research highlights the potential constraints on future demand growth due to the prolonged period of high prices.

Despite record-high prices, global Gold consumption remained steady at 3,057 metric tons in 2023, nearly matching the average of the past decade. China’s Strong Demand: ANZ anticipates a 16% year-on-year increase in China’s gold consumption to 959 metric tons in 2023. This growth is attributed to pent-up demand and a shift towards value preservation amid economic uncertainties.

Gold Live Chart