XAU/USD is hovering around $2,660 after the US open

XAU/USD Current Price: $2,656.69

• Geopolitical tensions in the Middle East undermined market sentiment on Wednesday.
• US ADP report suggested resilient labor market, suggests modest interest rate cuts.
• XAU/USD aims to retake its short-term advance, resistance around $2,670.

Spot gold is hovering around $2,650 a troy ounce on Wednesday, capped in a tight trading range amid a generally bearish market mood favoring both gold and the US dollar (USD). The conflict in the Middle East, with Israel and Iran launching attacks back and forth, is weighing on investor sentiment. Fears of supply disruptions are pushing crude oil prices higher and speculative interest in safe-haven assets. Stock markets traded mixed in Asia and Europe as massive Chinese stimulus announced last week partly offset geopolitical tensions.

Wall Street opened mixed, with only the Dow Jones Industrial Average (DJIA) trading in positive territory, up a modest 0.02% at the time of writing. The Nasdaq Composite and S&P500 are trading in the red, although losses are modest. US traders digest the United States (US) employment data as the ADP report on private job creation showed that 143,000 new positions were added in September, better than the 120,000 expected by market participants .

The encouraging numbers are supporting the greenback ahead of September’s non-farm payrolls report due out on Friday. Federal Reserve (Fed) officials expressed concern about the employment situation, shifting the focus away from inflation. Policy makers are generally confident that inflation will move towards their 2% target. However, the once-hot labor market has lost steam in recent months, and weaker-than-expected numbers could prompt the Fed to cut interest rates more aggressively. That’s not the case after the ADP release, one of the reasons why US indices remain afloat.

XAU/USD Short Term Technical Outlook

The daily chart for XAU/USD shows that it pared early losses and turned around the open. Moving averages are heading firmly north, well below current levels, keeping the long-term bullish trend alive. Technical indicators, meanwhile, have edged lower, albeit well above their midlines and with limited downside power, unable to suggest a steeper decline.

In the short-term, and according to the 4-hour chart, XAU/USD aims to resume its advance. The pair is trading just above a flat 20 SMA, while the 100 and 200 SMAs are aiming higher, well below the shortest, all supporting a bullish extension. Finally, technical indicators have resumed their progress and are currently crossing their midlines into positive territory, reflecting increased buying interest.

Support levels: 2,652.60 2,638.10 2,623.25

Resistance levels: 2,670.00 2,685.00 2,700.00