XAU/USD:

GLOBAL GEOPOLITICAL TENSIONS AND EXPECTATIONS OF A CHANGE IN THE MONETARY RATE IN THE UNITED STATES ARE THE DRIVERS OF THE PAIR’S GROWTH

Current trend

The XAU/USD pair has been actively increasing in value since the middle of last month, reaching the previous year’s highs around 2140.62 (Murrey level [ 1/8]) but today, it has lost some of its gained positions.

Positive dynamics are developing against two main long-term factors: global geopolitical tensions and expectations of a correction in monetary policy by the US Federal Reserve. Thus, after the outbreak of clashes between Israel and the Palestinian Hamas movement last year, an ounce of gold has already risen in price by more than 300.0 dollars, and since the likelihood of a resolution to the conflict soon is low, precious metals will continue to attract investor interest as a shelter asset. At the same time, traders’ confidence in the American regulator’s imminent transition to the “dovish” rhetoric is strengthening, weakening the dollar. While department officials note that inflation is still high, and the risks of its acceleration amid the recovery of the economy and labor market remain, most experts expect that the decision to adjust the cost of borrowing will be made no later than June.

Today, the quotes retreated to the area of 2125.00 (Murrey level [8/8]) as investors took a wait-and-see approach before today’s speech by US Federal Reserve Chairman Jerome Powell in Congress. It is expected that he will inform legislators about the situation in the economy and the prospects for further actions by the regulator, confirm the possibility of a limited reduction in interest rates during the year, but note that there is also no need to rush to change the vector of monetary policy.

Support and resistance

The trading instrument has consolidated above 2125.00 (Murrey level [8/8]), which will allow it to grow to the area of 2156.25 (Murrey level [ 2/8]) and 2187.50 (Murrey level [7/8], W1).

Technical indicators reflect the upward trend in the market: Bollinger bands reverse upwards, and the MACD histogram is growing in the positive zone. The chart decrease beyond the upper Bollinger band and the likelihood of Stochastic reversing down in the overbought zone do not exclude a limited correction to 2093.75 (Murrey level [6/8]).

Resistance levels: 2156.25, 2187.50.

Support levels: 2125.00, 2093.75, 2031.25.

Trading tips

Long positions may be opened from 2132.00 or after a reversal around 2093.75, with the targets at 2156.25 and 2187.50. Stop losses are 2115.00 and 2075.00, respectively. Implementation time: 5–7 days.