Gold price (XAU/USD) is recovering from a recent pullback, gaining momentum during Tuesday’s Asian and European sessions. The precious metal has found support around $2,390 after a slight dip on Monday.
XAU/USD Market Sentiment:
Easing geopolitical tensions in the Middle East have contributed to the gold price rebound, as Israeli authorities have indicated a desire to avoid a full-scale war. This has reduced the demand for the safe-haven US Dollar, allowing gold to regain some ground.
The market’s focus is now on the Federal Reserve’s (Fed) monetary policy decision, due on Wednesday. While no change in interest rates is expected, investors are closely watching for any dovish signals from Fed Chair Jerome Powell, especially regarding the potential timing of rate cuts. Recent data indicating easing inflation and a softening labor market have increased expectations for rate cuts starting in September.
XAU/USD Economic Data:
Today’s release of the Conference Board’s Consumer Sentiment Index and US JOLTS Job Openings data is expected to show a slight deterioration in the US economy. These data points could further support the case for a dovish Fed stance.
XAU/USD Technical Analysis:
XAU/USD is currently in a corrective phase after its recent rally. The pair has found support at the 61.8% Fibonacci retracement level near $2,360, and the higher low formed last week suggests a potential end to the correction.
The 4-hour Relative Strength Index (RSI) is currently neutral, indicating a lack of clear direction. A break above the $2,400 resistance level, potentially triggered by soft economic data and a dovish Fed message, could lead to further gains towards $2,430. Conversely, a failure to break above this resistance could result in a retest of the 61.8% Fibonacci support at $2,350, followed by $2,320.
