XAU/USD is holding higher ground at around $2,670

XAU/USD Current Price: $2,669.02

• Overall, encouraging US data provided a near-term boost.
• Federal Reserve officials declined to comment on monetary policy.
• XAU/USD is poised to extend its advance, although the risk of a downward correction has increased.

Spot gold hit $2,685.45 on Thursday, another record high. XAU/USD is currently trading around $2,671 as investors continue to sell the US dollar (USD). The United States (US) released some encouraging macroeconomic numbers, though nothing shocking. The figures provided temporary USD support at the start of the US session, but the greenback quickly resumed its decline.

The US reported that initial jobless claims for the week ended September 20 rose by 218,000, better than the previous 219,000 and the 225,000 expected. The country also confirmed an annual growth rate of 3% in the year to June, according to the final Q2 Gross Domestic Product (GDP) estimate. Finally, durable goods orders came in at 0.0% in August, better than the -2.6% expected.

Meanwhile, several Federal Reserve (Fed) officials hit the wire in various events. However, no one provided new clues on monetary policy. In fact, most refrained from discussing it after cutting interest rates by 50 basis points (bps) when they met last week. Such silence has left speculative interest in his belief that policymakers will offer a similar cut in November.

Further hurting the USD, Wall Street turned positive. After the back-and-forth offered in the first half of the week, US indices seem to have found their way north.

XAU/USD Short Term Technical Outlook

The daily chart for XAU/USD shows that it continues to post higher lows and highs, supporting another move north. Technical indicators, meanwhile, are heading firmly north, within overbought levels, with no signs of upside exhaustion yet. Meanwhile, the pair continues to develop above strongly bullish moving averages, which are well below the current level. Overall, the risk of a downward correction has increased despite the lack of technical signs of it.

In the short term, and according to the 4-hour chart, it is clear that the bulls remain in control. An intraday slide met buyers around the 20 Simple Moving Average (SMA), now providing dynamic support at around 2,650. At the same time, the 100 and 200 SMAs accelerated higher, well below their shorters, reflecting persistent upside strength. Finally, the Momentum indicator is targeting marginally higher within positive levels, while the Relative Strength Index (RSI) indicator is pulling back modestly from the overbought extremes, drawing minor divergences. Such divergences do not seem to be enough to support a decline, but they are an early warning of a potential decline in the coming sessions.

Support levels: 2,662.80 2,650.00 2,638.10

Resistance levels: 2,685.00 2,700.00 2,715.00