- Gold prices fell 0.08% below Monday’s high of 1847.45.
- The US S&P Global PMI for February beat expectations, with the exception of the manufacturing index, which remained in contraction territory.
- Tensions between China and the US over military aid to Russia soured market moods.
Gold prices fall in the North American session, while the US dollar (USD) surges on risk aversion. Expectations that the US Federal Reserve (Fed) will “aggressively” tighten financial terms are making investors uneasy. At the same time, financial market futures are forecasting higher interest rates in the range of 5.25% to 5.50%, and Fed officials have added hawkish rhetoric to these speculations. XAU/USD is trading around 1838.58.
U.S. Business Activity Improves in February
US stocks opened in the red as sentiment continues to deteriorate. S&P Global reveals that the US economy recorded a rebound in business activity in February, with all indicators beating estimates. However, manufacturing activity remained in contraction territory at 47.8 as measured by the S&P Global Manufacturing PMI.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Despite headwinds from rising interest rates and pressure on the cost of living, there are signs that inflation has peaked and recession risks have receded. The economy has brightened up since then,” he said. He added that supply constraints have shortened delivery times.
US Treasury yields capped gold’s gains
The U.S. dollar index, a measure that compares the value of the dollar to a basket of currencies, began to taper some of its earlier gains after the release of the PMI report. Remaining at 6 bps to cap the rise of the yellow metal, the XAU bulls are eyeing a test in the $1850 area.
From a geopolitical perspective, US Secretary of State Anthony Brinken has warned China not to provide any more lethal military support to Russia’s invasion of Ukraine, adding that there would be “serious consequences” if it did so. rice field. Meanwhile, U.S. President Joe Biden visited Ukrainian President Volodymyr Zelensky in Kiev and expressed U.S. support in response to Mr. Blinken’s remarks.
what do you see?
Separately, Wednesday’s US economic docket featured the minutes of the latest FOMC meeting, which could shed light on the forward path the US Federal Reserve is taking on monetary policy.
gold technical analysis
The XAU/USD daily chart shows a neutral bias for the yellow metal. It must be said that if the XAU/USD does not hit new highs this week, it could pave the way for further declines. In terms of oscillators, the path of least resistance is downwards and the Relative Strength Index (RSI) is in bearish territory and trending downwards. The rate of change (RoC) shows that buying pressure is waning.
Therefore, the first support for the XAU/USD is at the 100-day Exponential Moving Average (EMA) of $1820.45, following last week’s low of $1818.97. Violation of the latter will result in the $1800 mark.