XAU/USD Current price: $2,396.06
- Financial markets appear more stable following comments by BOJ Governor Shinichi Uchida.
- Investors will continue to watch the Federal Reserve’s future actions.
- XAU/USD remains below $2,400 but lacks clear directional strength.
Spot gold prices stabilized just below the $2,400 mark, while the US dollar disappeared from investors’ radars amid improved market sentiment. On the FX front, the greenback declined unevenly, appreciating only against safe-havens JPY and CHF. XAU/USD, meanwhile, is trading near its daily open of $2,390.34.
The biggest relief came from Asia. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida weighed in and said the BoJ would not raise interest rates if global markets remained unstable, reducing the likelihood of a near-term hike. The news put an end to the Japanese yen’s (JPY) rally after the BoJ raised rates by 15 basis points (bps) last week, while Governor Kazuo Ueda subsequently stated that rates were still at “very low” levels. In addition, government bond yields continued their weekly recovery after falling to multi-year lows earlier this month.
In terms of data, the calendar had nothing of relevance to offer as speculative interest was still focused on what policymakers might do next. The US Federal Reserve (Fed) is also in the eye of the storm as concerns about economic growth triggered by recent macroeconomic data fuelled speculation that the central bank might cut interest rates ahead of the next monetary policy meeting scheduled for September.
Short-term technical outlook for XAU/USD
In such a scenario, gold is likely to remain strong as uncertainty usually fuels demand for the safe-haven metal. The XAU/USD daily chart shows that technical indicators have pared losses and moved marginally higher, within neutral or negative levels, limiting the bullish potential in the coming sessions. Moreover, the pair is trending below a bullish 20 Simple Moving Average (SMA), which is currently extending its rise above the 38.2% Fibonacci retracement of the June/July rally at $2,411.20, an immediate resistance level. Finally, the longer moving averages continue to rise well below the current price, supporting the long-term bullish stance.
In the short term, XAU/USD is neutral. The 4-hour chart shows a bearish 20 SMA continuing to trend south below current levels after breaking below a flat 100 SMA. The 200 SMA, meanwhile, offers dynamic support at around $2,385.00. Finally, technical indicators have rebounded from their recent lows but have flattened within neutral levels, somehow suggesting a lack of buying interest as XAU/USD is just below its midlines.
Support Levels: 2,385.00 2,372.90 2,366.00
Resistance levels: 2,411.20 2,424.10 2,438.80
