Spot Gold Hits an Intraday High On Wednesday
Spot gold continued its recent upward trend on Wednesday, hitting an intraday high of $1844. However, as the day progressed, XAU/USD moved back from this level due to a resurgence of USD demand following the country’s release of tepid macroeconomic figures.
Despite this setback, gold held on to its intra-day gains, thanks to a weakening USD and a general risk-averse environment. At the same time, however, some factors could push gold prices lower soon.
For one, there are signs that the global economy may be recovering faster than expected, which could reduce demand for haven assets like gold. In addition, concerns about rising interest rates could make other investments more attractive than gold, which does not pay dividends or interest.
In recent days, market participants have been moving away from the US dollar, driven partly by positive indicators affecting its major rivals and tepid economic figures out of the United States. On Wednesday, the US released its Manufacturing PMI for February, which came in at 47.7 – a very marginal increase from the previous month’s figure of 47.4.
Unfortunately, this missed analysts’ expectations of a reading of 48. In addition, the survey showed that new orders remain sluggish, owed to buyer and supplier differences over price levels, indicating persistent inflationary pressures.
Investors have been closely watching the greenback recently as the currency has faced challenges on several fronts. In addition to concerns over inflation and economic growth, there are also worries about rising interest rates and the impact this could have on the US economy. As a result, many traders and analysts are looking to diversify their portfolios and move away from the dollar.
Technical Analysis of XAU/USD: Attempting to Beat 23.6% Retracement
The XAU/USD pair is currently attempting to beat the 23.6% retracement of the decline from $1,960.05 to $1,804.70, currently at $1840. According to the daily chart, the intraday rally halted just ahead of some bearish signals at the 20 SMA level of $1,848.
However, the 100 SMA has recovered and indicates a bullish trend below the current level. While the technical indicators show a general upward trend, they remain in the red zone.
A daily rise above the 23.6% Fibonacci resistance at $1840 should signal gains in the upcoming sessions. If XAU/USD breaks through this level, it could reach the 38.2% Fibonacci retracement level at $1863. A sustained move above this level could indicate that the bullish momentum is likely to continue.
On the other hand, if the pair fails to break above the 23.6% retracement level, it could experience some downside pressure, potentially testing the $1820 support level. Below this level, the next primary support level is located at $1800.
Short-Term Buyers Lose Interest in XAU/USD as Technical Indicators Deteriorate
Looking at the 4-hour chart for XAU/USD, short-term buyers are losing interest in the pair. This development comes after it failed to overcome a mild bearish 100-day SMA, while technical indicators lost upward momentum near the overbought sections. In addition, the 200 SMA is consolidating a bearish slope above the current level.
Support levels for XAU/USD include $1,803.00, $1,825.90, and $1,812.20. These levels may come into play if the pair experiences further downside pressure soon.