Gold Price Surges to Intraday Highs, Sustains Uptrend Amidst Modest Weekly Gains
Gold price (XAU/USD) continues to climb, reaching fresh intraday highs and maintaining a three-day uptrend, despite experiencing mild weekly gains. The bullish chart formation and the weakened US Dollar contribute to the dominance of XAU/USD bulls during a sluggish trading session. Investors are now closely monitoring the movement of the US Dollar, risk catalysts, and mid-tier China data for immediate market directions.
Gold Price Extends Winning Streak as US Dollar Weakens
Gold price (XAU/USD) maintains its three-day winning streak, currently trading near $1,965. The continued weakness of the US Dollar plays a crucial role in supporting the precious metal. Additionally, optimism in the market, along with expectations of increased stimulus measures from China, adds to the positive sentiment. The absence of speeches by Federal Reserve (Fed) policymakers due to the pre-FOMC blackout and a light economic calendar also contribute to the overall market conditions.
US Dollar Index Declines, Impacted by Market Sentiment
The US Dollar Index (DXY) reverses its previous corrective bounce, as it faces selling pressure around 104.00, resulting in a 0.10% decline at the time of writing. The downward movement of the US Dollar against six major currencies reflects market skepticism regarding the Fed's next steps.
Technical Analysis of Gold Price
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| XAUUSD HOURLY CHART |
Gold price demonstrates an inverse head-and-shoulders (H&S) chart pattern on the hourly timeframe, indicating a potential bullish reversal.
In addition to the bullish chart formation, the sustained trading of XAU/USD above the 200-Hour Moving Average (HMA), currently located around $1,956, instills hope among buyers.
Moreover, the Relative Strength Index (RSI) line shows positive prints without reaching overbought levels, providing further support for the bullish outlook on gold.
Based on these factors, XAU/USD appears well-positioned to test the neckline of the aforementioned inverse H&S pattern, located around $1,983. However, the sustainability of the upward momentum depends on the ability of the gold price to surpass the $2,000 threshold after successfully breaking above the $1,983 resistance level.
On the flip side, a clear break below the 200-HMA support near $1,956 may swiftly push the gold price towards the previous monthly low of approximately $1,932 recorded last week. If the XAU/USD breaks below $1,932, it could encounter further selling pressure, potentially reaching the psychological level of $1,900.
Conclusion
In conclusion, the gold price is expected to remain relatively strong, although the upside potential appears limited. The prevailing bullish sentiment, supported by the inverse head-and-shoulders pattern and the sustained trading above the 200-HMA, provides a favorable outlook for XAU/USD. However, investors should closely monitor the US Dollar's movements, as well as any significant risk events and mid-tier economic data from China, to gain insights into the future direction of the gold market.