Past performance is not indicative of future results. All historical data, including but not limited to returns, volatility, and other performance metrics, should not be construed as a guarantee of future performance.
XAU/USD on a Daily Timeframe
XAU/USD on a daily timeframe has been exhibiting a bullish trend within a rising channel since early February 2024. The asset has consistently respected both the lower and upper trend lines of this channel, with price action oscillating between these levels. Recently, XAU/USD has approached the upper trend line of the channel, near the all-time high, and psychological resistance level of 2500, which has proven to be a significant barrier.
In recent trading sessions, XAU/USD showed strength as it surged towards the 2500 mark, driven by positive momentum and convincing fundamentals. The 50-day and 100-day moving averages, represented by the green and blue lines respectively, are trending upwards, further confirming the bullish momentum. The asset has also managed to stay above the 200-day moving average, which indicates a longer-term bullish outlook.
The RSI is currently hovering around 64, suggesting that XAU/USD is in bullish territory but not yet overbought. The Stochastic oscillator, however, is showing an overbought reading, which could signal a potential slowdown in the current upward momentum. This overbought reading, coupled with the strong resistance of both the channel and the 2500 level, could be a potential catalyst for a short-term retracement.
On the longer term side, if price break above the 2500 resistance level with conviction, the next target could be around 2642 (the 50% Fibonacci extension). The upward channel and favourable fundamentals seems to support XAU/UAS Bulls at the moment.
However, if XAU/USD fails to sustain this level, a pullback towards the 2430 support, where the 50-day moving average currently resides, could be expected. A further decline might see the price testing the 2367 level, near the lower boundary of the channel, offering a strong support zone. It has to be noted, that the 2500 level is a very significant resistance zone near the all time highs, and will likely prove to be a worthy opponent for bulls to cross, even if just in the short term. This scenario could be fuelled by a stronger U.S. dollar or a shift in investor sentiment towards risk-off assets.
Investors should remain cautious of upcoming U.S. economic data releases, including the Federal Reserve's interest rate decision and any geopolitical developments, which could significantly impact the price of gold. These factors could either reinforce the current bullish trend or trigger a broader correction.
Summary:
- Gold has been moving in a bullish channel since early February 2024.
- The price has approached the upper channel boundary and psychological level of $2500.
- Technical indicators signal a strong bullish trend with signs of overbought conditions.
- If $2500 breaks, the next target could be around $2642.
- Failure to break $2500 might lead to a pullback towards $2430 support.
