Gold increased on US Dollar Weakness and Sino – US Tensions

  • XAU/USD gained positive momentum after softer US economic activity.
  • Eyes on the ISM Manufacturing PMI.
  • US-China tensions raised the demand for safe-haven gold.

XAU/USD Fundamental Analysis

XAU/USD is trading at $1,844.85, up by 0.46% in 24 hours. A report of consumer confidence that revealed a decrease to a three-month low in February helped the price of gold rise.

US economic activity

According to data from Tuesday, the CB Consumer Confidence dropped from 107.1 in January to 102.9 in February, lower than the expert estimate of 108.5. Moreover, manufacturing companies in the Fifth District reported worsening economic circumstances in February. The composite manufacturing index fell from -11 in January to -16 in February, lower than forecast.

The relatively lower-than-expected US economic activity and consumer confidence figures weighed down the price of the USD.

The US Dollar Index (DXY) is trading at 104.33, down by 0.52% in 24 hours, favouring the rising prices of gold. Meanwhile, the US 10-Year Treasury Yield rose 1.05% to 3.955, limiting the XAU/USD rise.

US-China tensions

On the geopolitical front, the US-China tensions kept favouring the yellow metal for the day. On Monday, Chinese military authorities criticized the US in a public statement this week after a US Navy patrol and surveillance aircraft sailed over the Taiwan Strait.

Moreover, on Tuesday, the Belarusian leader, who provided ground for Russian soldiers’ initial invasion of Ukraine last year, made an official visit to China, despite warnings from American officials that Beijing may be considering helping Moscow in its current war against Ukraine.

The US 7th fleet spy plane and the visit from a significant political supporter of Russian President Vladimir Putin occurred when tensions between the US and China raised recently. In such uncertain circumstances, many investors choose to purchase gold since it is seen as a safe haven asset, increasing its demand and price.

Gold Technical Analysis

Gold Technical Analysis

The H2 Chart of XAU/USD shows that the rising trend of gold might be ending in the short run. The Gravestone Doji Candlestick is giving a bearish indication ahead. Furthermore, the other technical indicator, the Stochastic Oscillator, also confirms the bearish signal as the %K and %D lines have crossed below the overbought zone.

On the other hand, the Williams %R shows that the opportunity to enter a short trade might have gone. Therefore, the idea is to wait for the gold price to fall below the first support level of 1833. The next support will be around 1829, where the 100-Day Simple Moving Average is resting.

The long-term trend of gold seems bullish; however, in the short run, there are signs of possible reversal at the moment.

Daily Technical Levels:


Pivot: 1820.61                                               

If the decisions you make about where you invest your blood, sweat, and tears are not consistent with the person you aspire to be, you’ll never become that person.

Clayton M. Christensen