A potential near-term slide in the making

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XAU/USD Current price: $1,784.20

  • The American Dollar turned higher after Wall Street’s opening, trades within familiar levels.
  • Investors await the US Consumer Price Index and central banks’ monetary policy decisions.
  • XAU/USD gains bearish traction in the near term, with support at around $1,775.

Spot gold trades marginally lower on Monday at around $1,784 a troy ounce as the US Dollar recovers its poise. The American currency fell throughout the first half of the day, despite the poor performance of high-yielding equities, yet it recovered following the US opening, despite the better tone of Wall Street.

The New York Federal Reserve released the Survey of Consumer Expectations, which showed that inflation expectations have fallen for the year ahead, although they remain elevated. At the same time, the survey indicated that expected inflation marked a record month-to-month decline in November, while the median inflation uncertainty decreased in the short and medium term.

The news is encouraging ahead of the release of the US Consumer Price Index (CPI) on Tuesday. Annual November inflation is expected to have increased by 7.3%, easing from 7.7% YoY in October. More relevantly, the US Federal Reserve will announce its monetary policy decision on Wednesday, followed by the European Central Bank and the Bank of England announcements on Thursday.

XAU/USD price short-term technical outlook

The daily chart for the XAU/USD pair shows that it retreated below the 200 SMA, which is now providing dynamic resistance at around 1,791.20. A more relevant one is the daily high of $1,797.10. The 20 SMA has turned flat below the current level but still stands well above the 100 SMA. Finally, technical indicators ease within positive levels, reflecting the ongoing slide rather than suggesting more declines ahead.

In the near term, and according to the 4-hour chart, XAU/USD is neutral-to-bearish. The bright metal has extended its decline below a mildly bullish 20 SMA, while the longer ones remain far below the current level. The Momentum indicator, in the meantime, is now flat at around its 100 line, while the RSI heads firmly south at around 46, anticipating a potential slide.

Support levels: 1,775.15 1,762.70 1,749.10  

Resistance levels: 1,797.10 1,807.30 1,818.90

View Live Chart for XAU/USD 

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