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Mar 26
2024

Gold price remains confined in a range above $2,170 level, bullish potential seems intact

Gold price (XAU/USD) struggles to capitalize on the overnight modest gains and oscillates in a narrow trading band through the early part of the European session on Tuesday.

Technical Overview

From a technical perspective, weakness below the overnight swing low, around the $2,164-2,163 region, is likely to find some support near the $2,156-2,155 area ahead of the $2,147-2,146 horizontal zone. A convincing break below the latter could drag the Gold price further towards the next relevant support near the $2,128-2,127 zone en route to the $2,100 round figure.

Meanwhile, the Relative Strength Index (RSI) on the daily chart has eased from the overbought territory and favours bullish traders. That said, the $2,200 psychological mark could act as an immediate strong barrier hurdle, above which a fresh bout of technical buying should lift the Gold price towards the record high, around the $2,223 zone touched last Thursday.

Fundamental Overview

Gold price (XAU/USD) struggles to capitalize on the overnight modest gains and oscillates in a narrow trading band through the early part of the European session on Tuesday. Traders opt to wait on the sidelines ahead of the release of the US Personal Consumption and Expenditure (PCE) Price Index on Friday. The crucial data might influence expectations about the Federal Reserve's (Fed) rate cut path and provide a fresh directional impetus to the non-yielding yellow metal.

Meanwhile, the US central bank last week indicated that it remains on track to cut interest rates by 75 basis points in 2024. This keeps the US Treasury bond yields depressed, which is seen weighing on the US Dollar (USD) and lending some support to the Gold price. Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East suggest that the path of least resistance for the safe-haven precious metal remains to the upside. 

Traders now look to the US economic docket – featuring the release of Durable Goods Orders, the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index later during the early North American session. This, along with the US bond yields, will drive the USD demand and provide some impetus to the Gold price. Apart from this, the broader risk sentiment should contribute to producing short-term trading opportunities around the XAU/USD.

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