XAU/USD holds modest intraday gains above $2,510

XAU/USD Current Price: $2,514.13

• The following high-profile events in the United States and central bank announcements are driving caution.
• US Treasury yields have hit fresh one-year lows and are looking to extend their declines.
• XAU/USD consolidates gains above $2,500 with a neutral technical position.

Gold extended its recovery on Tuesday, trading around $2,513 a troy ounce at mid-session in the US. Financial markets turned risk-averse ahead of the headline events, resulting in a firmer US dollar against all but safe haven rivals. Gold, the Swiss franc and the Japanese yen posted modest gains against the greenback as Wall Street fell.

There was no specific catalyst for the sour state, but caution ahead of the release of the United States (US) consumer price index (CPI) on Wednesday and the European Central Bank’s (ECB) monetary policy decision on Thursday. On the former, market players expect price pressures to ease, but inflation remains above the Federal Reserve’s (Fed) target of around 2%. However, the Fed is scheduled to announce its monetary policy decision next week and will most likely cut interest rates by 25 basis points (bps).

Meanwhile, US Treasury yields are retreating. The 10-year note is offering 3.66% after hitting a fresh 52-week low of 3.64%. The same is happening with the 2-year note, which is now yielding 3.62% after dropping to 3.59%.

XAU/USD Short Term Technical Outlook

The daily chart for XAU/USD offers a neutral to bullish stance, with the pair still encountering intraday buyers around a simple moving average (SMA) of 20. Technical indicators, meanwhile, lack directional strength, with the Momentum indicator stuck around its line 100 and the Relative Strength Index (RSI) consolidating around 58. Finally, the 100 and 200 SMAs continue to grind higher, well below the current level. , limiting bear potential in the broader perspective.

In the short term, the 4-hour chart offers a neutral position. XAU/USD is trading above the 20 and 100 SMA, while the 200 SMA is advancing well below the current level. Technical indicators have turned flat, reflecting a lack of directional conviction, although the fact that the RSI is at 56 suggests that the bears have no interest in Gold.

Support levels: 2,507.60 2,489.60 2,475.70

Resistance levels: 2,519.75 2,531.60 2,545.00