The price of gold (XAU/USD) failed to extend yesterday’s gains on Wednesday as it pulled back to trade around $1,515. The price of the yellow metal has rallied this week to top $1,534 but it now appears to be losing some momentum after setting a new multi-year high.
Nonetheless, the price of the yellow metal continues to enjoy strong support around the key level at $1,500 and this could be used as a basis to set profit targets by the bears. The XAU/USD is now trading well above the 100-hour and the 200-hour MA lines in the 60-min chart, which indicates a short-term bulls bias.
XAU/USD (Gold) Fundamentals Overview
From a fundamental perspective, the price of gold is trading at the back of several economic events and data. And while recent economic data from the US has been relatively promising, events of the previous week are still driving the market sentiment.
Traders are now shifting their investments to safe-haven assets like gold amid risk aversion following a rate cut last week, and Trump’s announcement of trade tariffs to be imposed on $300 billion worth of Chinese products.
This week, the US economy posted positive consumer price index data beating expectations on a month-over-month basis and the annual estimates as well. The US Imports and Exports data on Wednesday was also impressive as it outperformed expectations on a monthly and yearly basis for July.
XAU/USD (Gold) Technical Analysis (the 60-min Chart)
Technically, the XAU/USD (gold) appears to be experiencing short-term bullish pressure with strong support around the $1,500 level. And looking at the Relative Strength Index Indicator, the price of the yellow metal is yet to hit overbought levels, which suggests that the recent pullback might have created an opportunity to advance further before the end of the week.
The bulls will target profits at around the $1,524 and $1,534 levels while the bears will look to pounce by targeting profits at $1,509 and $1,500 levels.
XAU/USD (Gold) Technical Analysis (the Daily Chart)
In the daily chart, the bullish bias is again confirmed using a bullish XABCD pattern, which continues to extend towards the $1,560 level. This could be a realistic target for long-term profits with the bulls looking to retain control.
On the other hand, the bears will hope that the XAU/USD (Gold) faces strong resistance around $1,520, which could trigger a major pullback towards $1,480 or even lower at $1,450.
In summary, the price of gold appears to be experiencing strong bullish pressure amid risk aversion trading. This could continue through Friday and possibly next week as traders continue to ignore positive economic data.