XAU/USD record highs keep coming

XAU/USD Current Price: $2,628.68

• Federal Reserve officials lined up ahead of Chairman Powell’s dovish message.
• The United States will release its August PCE price index this week.
• XAU/USD is trading near new highs, losing some of its bullish momentum but far from bearish.

Spot gold traded as high as $2,634.74 a troy ounce on Monday, hitting another record high. XAU/USD is currently hovering around $2,530 as general US dollar weakness keeps the pair afloat. The greenback found short-term demand in the first half of the day, but gains were modest and the USD advance looked corrective.

It later suffered a setback as several Federal Reserve (Fed) officials publicly backed last week’s decision to cut rates by 50 basis points (bps) while hinting at more monetary easing over the next few Monday. The conciliatory change in policymakers’ tone has not affected Wall Street, as US indices are hovering around their opening levels, not far from last week’s highs.

Meanwhile, S&P Global released preliminary United States (US) purchasing managers’ index (PMI) estimates for September, which showed that growth in business activity remained robust this month. The manufacturing PMI fell to 47 from 47.9 previously, missing the 48.5 anticipated by financial markets. On the other hand, the Services PMI came in at 55.4, which is better than the expected 55.2. Finally, the composite PMI was reported at 54.4, slightly below 54.6 previously.

By the end of the week, the US will release the August Personal Consumer Expenditure (PCE) price index, the Fed’s favorite gauge of inflation. The data could hint at what the central bank might do next and whether aggressive rate cuts would become the norm.

XAU/USD Short Term Technical Outlook

XAU/USD is up for a third day in a row and technical readings remain bullish despite the easing moment. The daily chart shows technical indicators stabilizing within overbought readings, while moving averages maintain positive strength well below current levels. In fact, the 20 Simple Moving Average (SMA) stands at around $2,540, reflecting the bullish strength of recent weeks.

In the short term, and according to the 4-hour chart, some unconfirmed bearish divergences suggest a potential correction. Technical indicators have retreated from their recent highs with neutral bearish slopes, supporting a short-term pullback. At the same time, XAU/USD continues to develop above bullish moving averages, with the 20 SMA accelerating north above the longer ones and acting as dynamic support around $2,597.

Support levels: 2,613.50 2,698.10 2,684.60

Resistance levels: 2,635.00 2,650.00 2,675.00