XAU/USD is approaching $2,650 without looking back

XAU/USD Current Price: $2,646.50

• Market players raised bets for another 50 bps rate cut by the Federal Reserve.
• Data from the United States surprised negatively, affecting demand for the US dollar.
• XAU/USD is trading at new highs with no signs of letting up.

The price of gold hit another record high on Tuesday, changing hands as high as $2,639.99 a troy ounce during Asian trading hours, to lower after the Wall Street open. The absence of relevant macroeconomic releases left financial markets without a new directional catalyst in the first half of the day, although prevailing US dollar weakness kept XAU/USD on the bullish side.

The shiny metal extended gains past the $2,640 mark during the American session and after the release of discouraging United States (US) data. Consumer sentiment in the country deteriorated in September, with the Conference Board’s (CB) consumer confidence index falling to 98.7 in September after reading 105.6 in August. Even more, the Present Situation Index fell 10.3 points to 124.3, while the Expectations Index fell 4.6 points to 81.7 but remained above 80. Readings below this usually anticipate a recession. As a result, market participants raised bets that the Federal Reserve (Fed) could cut interest rates by 50 basis points (bps) once again in November.

Apart from this, the Richmond Fed manufacturing index fell to -21 in September from -19 previously, while the -17 rate was anticipated. The macroeconomic calendar will remain tight on Wednesday, with the focus shifting to the end of the week when the US releases the August personal consumption expenditure (PCE) price index.

XAU/USD Short Term Technical Outlook

XAU/USD is trading around $2,645 with no signs of letting up. On the daily chart, the pair continues to make higher highs and lows, while technical indicators maintain modest bullish slopes within overbought levels. At the same time, the pair is developing well above bullish moving averages, with the 20 Simple Moving Average (SMA) now hovering around $2,545.

The near-term picture also declines risk to the upside, although some timid divergences anticipate a potential corrective slide. On the 4-hour chart, the moving averages have accelerated northward well below current levels in line with continued buying interest. However, the Momentum indicator continues to fall into positive territory, diverging from the price action. Finally, the Relative Strength Index (RSI) indicator is maintaining the positive trend, advancing into near overbought readings just ahead of overbought readings.

Support levels: 2,628.10 2,613.50 2,598.10

Resistance levels: 2,650.00 2,675.00 2,690.00