- The gold price is under pressure at around a two-month low.
- This week, attention will be on the upcoming US economic statistics.
- Geopolitical concerns also put downward pressure on the price of gold.
- Gold Tests Critical Support at $1800 level.
XAU/USD Fundamental Analysis
XAU/USD is trading at $1,810.49, down by 0.06% in 24 hours. Last week, the yellow metal lost value against the US dollar on all five trading days. Furthermore, its price has dropped for four consecutive weeks and is still under pressure at around a two-month low.
Upcoming US economic data
The Fed’s preferred measure of inflation, the Core Personal Consumption Expenditures Price Index (PCE), moved up to 4.7% in January from 4.6% in December as a result of a 0.6% monthly increase, according to a report released by the US Bureau of Economic Analysis on February 24. As a result of the data showing rising inflation, the global market sentiment weakened last week.
The US Dollar Index (DXY) remains slightly lower at 105.15, consolidating its recent gains due to a lack of economic data during the weekend. However, the US 10-Year Treasury Yield increased by around 0.25% in 24 hours, trading at 3.959.
Durable goods orders are due on February 27. Today, market participants will also watch the January pending home sales numbers. Higher-than-anticipated core durable goods orders would add to expectations for a more aggressive Fed interest rate path to control inflation, pushing USD upwards.
China recently announced a 12-point peace plan but did not receive any appreciation because of its ties to Russia. According to Jake Sullivan, the national security adviser for the US, China would pay serious consequences if it provided Russia with lethal support for the war in Ukraine.
Other foreign leaders, like those from Germany and the European Union, criticized China’s 12-point peace proposal and raised market geopolitical worries, which weighed on market sentiments.
On February 24, Ursula von der Leyen, president of the European Commission, stated that sanctions are substantially eroding Russia’s economic foundation.” Von der Leyen of the EU said that China must consider its values in that light because it has already sided with Russia.
The geopolitical worries about China and Russia also affected the price of gold.
XAU/USD Technical Analysis
The daily outlook of the XAU/USD chart shows that the yellow metal is reaching towards 2-month lowest level near 1806. The momentum indicators also point to extra selling pressure in the short term. The RSI has almost reached the 30 oversold regions, and the %D and %K lines of the Stochastic Oscillator have also entered the oversold region. These momentum technical indicators are suggesting that the selloff has reached its maximum and a reversal in the short-term is imminent. However, the RSI indicators still have some scope for further downside.
On the other hand, the critical 1800 level is expected to provide major support to the yellow metal. From here, there are chances for price rebound towards 38.2% Fibonacci retracement level of September 2022 to February 2023 at 1831. Any higher break would suggest a further rally towards the next weekly resistance area above 50-Day Simple Moving Average.
Meanwhile, the level of $1800 is critical to watch. Any breach below the psychological 1800 will set the next support close to it at 1791, where the 50% Fibonacci Retrecement Level and the 100-Day SMA are standing. A drop lower to this support would increase the bearish trend towards 61.8% Fibonacci Retracement Level below 1751.
XAU/USD Daily Technical Levels:
Pivot Point: 1812.09