- XAU/USD is trading near the $1,970 level, recording a loss of 0.40%.
- US yields have recovered and traders are waiting for potential new catalysts to model their expectations for the Fed’s next moves in a quiet week.
- The highlight of the week is Wednesday’s FOMC minutes.
In Monday’s session, XAU/USD is losing 0.40%, trading mostly near $1,970. Key factors driving the changes include a modest recovery in US yields and increased market caution as traders await the unveiling of new catalysts to continue betting on the Federal Reserve (Fed). In addition, markets continue to evaluate last week’s inflation data from the US and try to find some clues in the minutes of the Federal Open Market Committee (FOMC) from the last meeting in November, which will be released on Wednesday.
In the past week, the price of the yellow metal gained strength due to mounting pressure on falling US yields and the US dollar due to weak US Consumer Price Index (CPI) data from October. On Friday, the 10-year yield fell to 4.38% from its peak in late October to 5.02%, the lowest level since late September. Similarly, the 2-year and 5-year rates fell to their lowest level since September, at 4.80% and 4.80%, respectively. 4.35%.
On Monday, these rates recovered to 4.90%, 4.47% and 4.46%, which seems to me to be pressure on the recalcitrant metal. The question that now arises is whether one month of positive inflation numbers will be enough to end the Fed’s tightening cycle. Any new evidence of accelerating inflation or an overheating economy could fuel hawkish betting Fedwhich could affect the price.
XAU/USD Levels to Watch
Technical indicators per day diagram they reflect uncertainty in the short-term pace. Despite this, the Relative Strength Index (RSI) is enjoying a comfortable stay in positive territory, suggesting intact buying momentum. The Moving Average Convergence Divergence (MACD) shows flat green bars, which indicate a potential slowdown in the bullish spell, but does not necessarily indicate a full trend reversal.
Additionally, the price is trading just below its 20-day simple moving average (SMA) but above the 100-day and 200-day SMAs, indicating a broader bullish direction. This seemingly contrasts with the bearish short-term sentiment derived from the recent halt in bull action. However, this view it could also mean the bulls take a breather after a 2.2% winning week before continuing their rise.
Support levels: $1,940 (200-day SMA), $1,930 (100-day SMA), $1,900.
Resistance levels: $1,970 (20-day SMA), $2,000, $2,020.